April 25, 2006
US Wheat Outlook on Tuesday: Down 1-3 cents on follow through, forecast, corn
U.S. wheat futures were called to open down 1-3 cents Tuesday following weak overnight trade on forecasts for rain later this week in top producer Kansas' wheat fields and weak opening calls for Chicago Board of Trade corn futures, brokers said.
Losses could be limited by gains in precious metal futures, an 8-percentage point drop in Kansas' wheat crop's good-to-excellent rating late Monday and neutral Statistics Canada wheat plantings data, they said.
The U.S. Department of Agriculture reported late Monday that the maturing U.S. winter wheat crop was 39% in good-to-excellent condition as of Sunday, equal to last week's rating and topping traders' estimates for a 1 to 2 percentage-point decline.
The USDA said that 34% of the U.S. winter wheat crop was in very poor to poor shape, compared with last week's 32% in very poor-to-poor condition.
The crop was 26% headed, up from last year's 16% and the average pace of 14%.
Thirty percent of the Kansas' winter wheat crop was in good-to-excellent shape as of Sunday, compared with 38% last week; 31% of the state's crop was in very poor-to-poor shape versus last week's 23%, the USDA said.
"Still, a lot of key soft red winter wheat states got better," said Dan Cekander, a grain analyst at Fimat Futures, early Tuesday.
Only 20% of the U.S. spring wheat crop had been planted due to excessive precipitation in the Northern Plains, well behind last year's 37% and the average of 27%, according to the USDA.
Statistics Canada on Tuesday reported all-wheat plantings at 25.62 million acres, up from last year's 24.9 million acres. Pre-report estimates were 25.30 to 27.50 million acres.
In the overnight e-CBOT session, most-active July wheat closed down 2 1/2 cents at US$3.61 after closing Monday near the session low.
"It will take a close back above resistance at US$3.75 to provide the bulls with some fresh upside technical momentum," one technical source said. "Bulls do not want to see a close below last week's low of US$3.57 1/2. It would take a close below the March low of US$3.51 would produce serious chart damage to suggest another solid leg down in prices in the near term."
First resistance for CBOT July wheat was seen at US$3.70 - last week's high - and then at US$3.75. First support was put at US$3.62 - Monday's low - and then at US$3.60.
Kansas City Board of Trade July wheat ended overnight down 1 cent at US$4.42 per bushel after closing nearer to the session low on Monday.
"This is still a weather market," said a technical source. "Look for higher volatility in the near term, which is typical for serious weather markets in grains. A bullish pennant pattern has formed on the daily bar chart. It will take a close above last week's contract high of US$4.71 1/2 to provide the bulls with some fresh upside technical momentum. A close below support at US$4.37 would provide the bears with fresh downside technical momentum."
First resistance for KCBT July wheat was seen at US$4.50 and then at US$4.55. First support was seen at US$4.40 - Monday's low - and then at US$4.37 - last week's low.
Cash U.S. hard red winter wheat basis bids were mostly steady to down 7 cents at the Texas Gulf; soft red winter wheat basis bids were mixed; and spring wheat basis bids were also mixed, with 5-cent gains in Billings, Mont., and Minneapolis and a 5-cent loss in the Minneapolis rail bid, grain merchandisers said.
In wheat export news, Japan sought 80,000 tonnes of wheat, including 40,000 U.S. wheat, in a tender to be concluded Thursday.
In global wheat news, India's wheat imports could be larger than currently planned if forecasts for a weak monsoon season prove correct, analysts say. The Indian government has already purchased 500,000 tonnes, and plans to import another 3 million tonnes.
Finally, China's wheat imports in March, at 94,459 tonnes, were down 85.7% from the previous year. China also exported 771,717 tonnes of corn, down 29.8%, during March, according to customs data.
