May 1, 2006

 

US Wheat Outlook on Monday: Up 2-3 cents; heavy rains miss west HRW belt

 

 

Analysts expect Chicago wheat futures to open 2 cents to 3 cents per bushel higher Monday on a firmer overnight session and on western areas of the hard red winter wheat belt receiving only scattered showers over the weekend, sources said.

 

In overnight e-cbot trade, May wheat was up 4 cents at US$3.50 1/4 and July was up 2 3/4 cents at US$3.61 1/4.

 

"You're going to be led (higher) by Kansas City wheat," said Brian Hoops, senior market analyst and president of Midwest Market Solutions in Yanktoe, S.D.

 

Kansas City Board of Trade wheat futures are expected to open 4-6 cents higher on lack of rainfall, he said.

 

"We had lighter rains than expected in parts of the western belt of Kansas, where the main wheat-producing regions are. They saw probably only a half inch of rain, and they really needed to see much more than that," Hoops said.

 

Western areas of the HRW belt saw light rains over the weekend, with chances for only scattered rainfall the next seven to 10 days, which will continue to raise concerns of further crop stress in the key area of western Kansas, the DTN Meteorlogix weather service said. Western areas of the belt saw rain totals of 0.10-0.40 inch over the weekend, while eastern areas saw 0.50-2.00 inches of rain.

 

Western belt areas could see light rain or drizzle early Monday and in eastern and southern locations Monday night or early Tuesday. Scattered showers and possible thundershowers are seen later Tuesday or Wednesday, with a trace to 0.25 inch in the west and 0.10-0.75 inch in the east and south-central locations, Meteorlogix said.

 

In the northern Plains hard red spring wheat areas, mostly dry conditions with a few light showers in the west and scattered showers in the east were seen over the weekend. Scattered showers are forecast in eastern areas Monday with mostly dry conditions in the west. Dry weather is expected Tuesday, with scattered showers and thunderstorms possible in the east on Wednesday. The rainfall is expected to continue delaying fieldwork and planting in eastern locations, Meteorlogix said.

 

Meanwhile, funds at the cBOT decreased long positions by 4,029 contracts to total 63,760 positions, or 16.7% of open interest, the Commodity Futures Trading Commission's Commitments of Traders report showed. Funds added 2,317 shorts to total 78,212 positions, or 20.4% of open interest.

 

Deliveries against the CBOT May contract totaled 627, with the main issuers being Calyon Financial at 300 and Term Commodities at 102. ADM stopped 421, while Bank of America stopped 97 and Bear, Stearns stopped 86 deliveries.

 

Technically, July CBOT wheat created a double-bottom on the charts at US$3.51, which has allowed prices to climb.

 

In other news, the 49th annual Hard Red Winter Wheat Tour, sponsored by the Wheat Quality Council, begins Tuesday in Junction City, Kan., with an unusually mature Kansas crop expected after a warm winter, drought stress and recent freeze damage.

 

Thirty percent of the Kansas HRW crop was good to excellent last week, with 31% in poor-to very-poor condition, the USDA reported.

 

A shipment of wheat from Australia to India showed higher pesticide levels than what test results first showed, reports said. The issue, however, relates to the analysis of scientific tests and not poor quality of the wheat. The first cargo of Australian wheat arrived last Tuesday in India and a second cargo is scheduled to arrive Tuesday, May 2. Officials said they expect to have the issue resolved soon.

 

China's 2006-07 winter wheat crop is progressing normally and is now in the jointing stage in the Yellow River Basin and is in the boot/flowering stage in the southern North China Plain. However, the Yellow River Basin, which accounts for 38% of wheat production, is in a minor drought and could use rain, the U.S. Department of Agriculture attache said in a report issued Friday.