May 2, 2006

 

US Wheat Outlook on Tuesday: 3-4 cents higher as HRW conditions decline

 

 

U.S. wheat futures are expected to open 3 cents to 4 cents per bushel higher Tuesday on a firmer overnight trade and on data showing winter wheat conditions declined in the latest reporting week, sources said.

 

In overnight e-cbot trade, May wheat was up 3 1/4 cents at US$3.56 1/2 and July was up 4 3/4 cents at US$3.69 3/4.

 

HRW wheat conditions declined to 38% poor to very poor in the week to April 30, from 34% the previous week. Just 36% of the crop is good to excellent, versus 39% the previous week, the U.S. Department of Agriculture reported Monday afternoon.

 

Some traders and analysts had expected a small improvement in the crop ratings, due to recent rains, so the decline is a bit of a surprise and is supportive for prices.

 

Kansas - the largest HRW-producing state in the U.S. - was 26% good to excellent, down from 30% the previous week, while the portion of the crop in poor to very poor condition rose to 37%, from 31% the previous week.

 

Thirty-nine percent of the U.S. HRW crop had headed, up from 26% the previous week and the five-year average of 26%.

 

The Dow Jones Winter Wheat Condition Index - where 100 is considered a normal crop - declined slightly to 79, from 81 the previous week. Last year at this time, the overall crop was rated at 103.

 

The U.S. spring wheat crop was 42% planted, up from 20% the previous week and down slightly from the 43% five-year average. North Dakota is 32% planted, compared to 10% last week, but down from 50% at this time last year. It is holding with the 32% five-year average, however. Eleven percent of the spring wheat crop has emerged so far, versus 19% last year and the 15% five-year average, the USDA said.

 

The 49th annual Kansas Hard Red Winter Wheat Tour, sponsored by the Wheat Quality Council, begins Tuesday in Junction City, Kan. Commentary by Man Financial said a wide range of crop estimates were coming from the KCBT trading floor, anywhere from 310 million to 370 million bushels.

 

An official with the Nebraska Wheat Board told Dow Jones Newswires on Tuesday that the state's wheat crop looks good, except in southwestern areas where dry conditions exist. Nebraska, however, won't be included in this year's WQC tour.

 

Weather conditions will continue to be key for the market, traders said, particularly for dry southern and western areas of the HRW belt.

 

Episodes of showers and thundershowers are expected to continue through Thursday from southern Kansas southward to northern Texas. The heaviest rains, 0.30-1.50 inches, is seen in central and eastern areas of this region, with only 0.10-0.30 inch and locally heavier amounts in the west, the DTN Meteorlogix weather service said.

 

Scattered showers are expected through much of the central and southern Plains Friday into Saturday, with the heaviest rains in the central and east.

 

Meanwhile, wet weather is expected to continue delaying fieldwork in eastern areas of the northern Plains and the western Midwest.

 

Deliveries against the CBOT May contract totaled 216, with UBS issuing 173 of those. Bank of America stopped 101 and ADM stopped 113 of the deliveries, while Man Financial stopped two.

 

At the Minneapolis Grain Exchange, 117 delivery notices were issued by ADM, with Country Hedging stopping all of them.

 

In other news, the 49th annual Kansas Hard Red Winter Wheat Tour, sponsored by the Wheat Quality Council, begins Tuesday in Junction City, Kan.

 

The export markets are quiet this week with holidays being observed around the globe. Japan won't hold its weekly wheat tender this week because of a national holiday.

 

Australia's 2006-07 wheat production remains unchanged at 24 million metric tonnes, a USDA attache report said. However, much of the winter grain belt began suffering relatively dry conditions at the time the report was written.

 

Australia's 2006-07 wheat exports are pegged at 17.1 million tonnes, the report said.