May 1, 2007

 

US Wheat Outlook on Tuesday: 3-5 cents lower on improving US crop conditions

 

 

U.S. wheat futures are expected to start 3 to 5 cents lower Tuesday as improving conditions in the U.S. winter wheat crop are expected to weigh on prices, a floor analyst said.

 

In overnight electronic trading, CBOT July wheat slipped 1 1/4 cents to US$4.94 1/4 per bushel, while July KCBT hard red wheat declined 3 1/2 cents to US$4.83.

 

Crop conditions improved in most of the winter wheat belt, and that should undermine wheat futures prices, the analyst said.

 

The U.S. Department of Agriculture reported Monday that 56% of the winter wheat crop was in good-to-excellent condition, up 2 percentage points from the previous week and above traders' expectations of a 1 percentage point gain or loss from last week's level.

 

In Kansas, the largest hard red winter wheat producing state, conditions improved by five percentage points from last week.

 

Conditions in Illinois, a major soft red winter wheat state, fell seven percentage points in the good-to-excellent category. A floor trader noted that while Illinois' conditions declined, neighboring Indiana, another soft red wheat producing state, improved by six percentage points reducing concerns.

 

Beyond the conditions report, there isn't much fresh news, a commission house trader said. Weather conditions appear to be improving slightly in Australia and India's wheat imports are not a"near-term" item, he added.

 

In the U.S. Midwest soft red winter wheat belt, there is a chance for a few light showers Wednesday and Thursday mostly in southern sections, DTN Meteorologix Weather said. Temperatures are expected to average near-to-above normal Wednesday and Thursday. 
 

In the U.S. hard red winter wheat belt, there is a chance for widely scattered thundershowers Wednesday with only a few light showers possible on Thursday, DTN Weather said. Temperatures are forecast to average near-to-above normal Wednesday and Thursday.

 

On daily open auction technical charts, CBOT July wheat settled lower and bulls are fading fast, a technical analyst said. First resistance is seen at US$5.00 and than at US$5.07. First resistance is pegged at US$4.93, and then at US$4.90.

 

July KCBT closed lower and hit a fresh two-week low Monday, the analyst said. First resistance is seen at US$4.90 and then at US$4.95. First support is seen at US$4.83 and then at US$4.80.

 

Deliveries posted against the May future were 2,818 contracts. Large issuers included the customer account of Man Professional Clearing, which issued 1,085 contracts and the customer account of Rosenthal Collins, which issued 400 contracts.

 

Large stoppers included the customer account of Man Professional Clearing, which stopped 983 contracts, and the customer account of the Astro division of UBS Securities, which stopped 412 contracts. The last trade assigned was April 30.

 

In other wheat news, India may purchase less than the 1 million metric tonnes it is seeking if offers are too costly, the country's Food Secretary said Tuesday.

 

India's local wheat purchases are expected to total 11 million metric tonnes in 2007 compared to its initial target of 15 million, a senior government official said. A delay in harvesting and farmer reluctance to sell in anticipation of higher prices has slowed government purchases.