May 4, 2006

 

US Wheat Outlook on Thursday: Flat-down 1 cent on overnight weakness, rains

 

 

U.S. wheat futures are expected to open flat to 1 cent per bushel lower Thursday following the slightly weaker overnight trend and on rains forecast for the central and southern Plains growing areas, sources said.

 

In overnight e-cbot trade, July wheat lost 1 1/2 cents to $3.63 1/2.

 

Terry Reilly, analyst at Citigroup Global Markets in Chicago, said prices will likely open near steady and then enter a two-sided trade.

 

Export sales for wheat were slightly above expectations but were expected to provide only mild price support.

 

Export sales for the 2005-06 crop totaled 388,800 metric tonnes in the week to April 27, 2 1/3 times the previous week and 72% above the prior four-week average, the U.S. Department of Agriculture said.

 

In addition, 185,500 tonnes were sold from the 2006-07 crop year.

 

Shipments totaled 606,200 tonnes, up 17% from the previous week and 74% over the previous four-week average.

 

Total export commitments lag last year's pace, however, with 26.092 million tonnes so far in the 2005-06 year, versus 27.452 million tonnes at the same time last year.

 

Meanwhile, the 49th annual Kansas Hard Red Winter Wheat Tour, sponsored by the Wheat Quality Council, found an average yield of 33.5 bushels an acre on the second day, versus a 46.5-bushel average on the second day of the 2005 tour.

 

Freeze damage and drought stress were evident in western Kansas, along with instances of wheat streak mosaic disease and green bug damage. The crop was unusually mature, with crop scouts estimating the harvest at just three weeks away for some of the advanced fields.

 

Tour participants acknowledged market speculation that the Kansas crop would bring in from 325 million-350 million bushels, versus last year's 380 million.

 

Meanwhile, the Oklahoma crop was estimated at an average yield of 21.14 bushels an acre for total production of 67 million bushels, compared to a 2005 state production estimate of 128 million. An average crop there is anywhere from 100-150 million bushels, but this year's was decimated by drought.

 

Weather remains key for the market, and beneficial rains and moderate temperatures are expected to boost Kansas's HRW crop potential, sources said.

 

Scattered showers and thunderstorms developed in the last 24 hours over southeastern Kansas, central and eastern Oklahoma and north-central Texas, with an estimated 0.25-0.75 inch of rain having fallen, DTN Meteorlogix said.

 

Episodes of scattered showers and thunderstorms are expected over the southern belt Thursday through Saturday, with rains averaging 0.50-1.50 inches and locally heavier amounts in southeastern Kansas, central and eastern Oklahoma and north-central and northeastern Texas. Rains are seen averaging 0.10-0.50 inch in the Oklahoma and Texas panhandles, southeastern Colorado and southwestern and south-central Kansas.

 

Sunday is expected to be mostly dry over the southern Plains, with a chance for sprinkles and light rain Monday into Tuesday, Meteorlogix said.

 

Deliveries against the CBOT May contract totaled 370, with the major stoppers being ADM at 161, Dowd Wescott at 100 and USA Blue with 744, the exchange reported.

 

At the Minneapolis Grain Exchange, 554 were issued by ADM and were all stopped by Country Hedging.

 

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

 

In other news, the Grain Board of Iraq will announce shortly a new tender to buy wheat on the international market. The head of the grain board, Khalil Assi, told Dow Jones Newswires the tender announcement is set for next week but declined to specify an amount.

 

Iraq needs approximately 3 million metric tonnes of wheat per year to meet its food needs.