May 3, 2006

 

US Wheat Outlook on Wednesday: Up 1-2 cents on overnight gains

 

 

U.S. wheat futures are seen opening steady to 1 cent per bushel higher Wednesday on a flat to firm overnight session and on news that the first day of the Kansas wheat tour showed yields down an average of 8.3 bushels an acre from last year, sources said.

 

In overnight e-cbot trade, July wheat was up 1/4 cent at US$3.66 3/4.

 

Some of the outside markets are relatively quiet early Wednesday, with crude oil down 11 cents to US$74.50 a barrel in electronic trade and the U.S. dollar mixed. Precious metals are fairly active, however, with gold making new contract highs and silver also higher on geopolitical concerns.

 

The 49th annual Kansas Hard Red Winter Wheat Tour, sponsored by the Wheat Quality Council, kicked off Tuesday with participants finding an average yield of 40.6 bushels an acre, down from an average of 48.9 bushels on the first leg of the 2005 tour. The estimate was based on 210 field surveys.

 

While the data confirmed most ideas that the crop will be less than last year's, it was still better in some areas than scouts had anticipated. Drought stress was noticed by nearly every group of crop scouts, with freeze damage also noted on many routes.

 

Crop experts said the Kansas winter wheat crop critically needs rain and moderate temperatures in the next 10 days, as the crop is "on the edge of being able to recover," said Jim Shroyer, extension crop production specialist at Kansas State University in Manhattan.

 

Meanwhile, scattered thunderstorms developed overnight in northern Kansas and southern Nebraska, with some activity reportedly heavy. Thundershowers were also reported in southern Oklahoma and north-central Texas, DTN Meteorlogix said.

 

Episodes of scattered showers and thunderstorms will be seen Wednesday through early Saturday. Rainfall should average 0.30-1.50 inches and locally heavier through eastern and south-central Kansas, central and eastern Oklahoma, north-central and northeastern Texas. Rainfall should average 0.10-0.50 inch and locally heavier through southwestern Kansas and the Oklahoma and Texas panhandles, according to Meteorlogix.

 

Deliveries against the CBOT May contract totaled 285, with Bank of America Securities issuing 281 of those. The USA Trading Division of Man Financial stopped 157, while ABN Amro stopped 52, Dowd Wescott stopped 44, to name a few.

 

AT the Minneapolis Grain Exchange, Fimat issued 43 deliveries, with Country Hedging stopping them.

 

No delivery notices were posted at the Kansas City Board of Trade.

 

In other news, a second shipment of Australian wheat made its way to India, amid complaints the previous shipment contained pesticides. The new arrival of wheat is being closely monitored after the first shipment contained a pesticide that was above permissible levels.

 

India is expected to import 500,000 metric tonnes of wheat this year due to a shortage.