May 5, 2006

 

US Wheat Outlook on Friday: Up 2-4 cents on wheat tour findings

 

 

U.S. wheat futures are expected to open 2 cents to 4 cents a bushel higher Friday on news that the Kansas hard red winter wheat crop is down significantly from last year, sources said.

 

Firmer opening calls are also being seen in the corn and soybean pits, which may produce spillover support in wheat. Also, a weak U.S. dollar is viewed as a supportive influence in the grain pits.

 

In overnight e-CBOT trade, July wheat rose 3 1/2 cents to US$3.66.

 

The 49th annual Kansas Hard Red Winter Wheat Tour, sponsored by the Wheat Quality Council, estimated average statewide production of 319.2 million bushels with an average yield per acre of 37.3 million bushels. This compares to last year's production of 380 million bushels.

 

Traders and analysts had speculated the number would anywhere from 325 million to 350 million bushels, so the estimate was below some of the lowest trade guesses and considered supportive for prices, a source said.

 

The crop has been hurt by dry conditions this winter and spring, and more recently by freeze damage. This occurred after temperatures had risen to above-normal levels, thus advancing maturity levels to above normal and making the crop more susceptible to the freezing temperatures.

 

Rainfall over the next few days is expected to help improve crop conditions in southern areas of the Plains, but it is probably too late to significantly increase production potential, DNT Meteorlogix said.

 

Traders are keeping an eye on falling temperatures Friday and Saturday, though they aren't expected to be cold enough to damage the wheat, Meteorlogix said.

 

Scattered showers and thundershowers are possible in southern portions of the HRW belt Friday and Saturday, with light rain possible as far north as southern Kansas. Showers are also seen in western Kansas and eastern Colorado during this period.

 

Rainfall is expected to be from 0.30-1.50 inches through central and eastern Oklahoma, north-central and northeastern Texas. Showers totaling 0.25-1.00 inch are seen through the Texas and Oklahoma panhandles, Meteorlogix said.

 

In the northern Plains' spring wheat areas, mostly dry conditions are expected through Sunday with light showers possible Monday and Tuesday.

 

Informa Economics issued its latest estimate of the U.S. HRW crop, reportedly pegging it at a low 690 million bushels, versus the U.S. Department of Agriculture's latest projection of 930 million bushels.

 

Informa reportedly pegged the soft red winter crop at 358 million bushels, versus the USDA's 309 million-bushel estimate. The U.S. white wheat crop was estimated at 251 million bushels, compared to the USDA's 298 million projection.

 

Meanwhile, five deliveries were made against the CBOT May contract, with USA Blue stopping four and Man Financial with one, the exchange reported.

 

At the Kansas City Board of Trade, 1,069 deliveries were posted, with the following featured stoppers: Man Financial at 576, Shay Grain at 252 and Fimat with 179.

 

At the Minneapolis Grain Exchange, 59 deliveries were issued and all were stopped by Country Hedging.

 

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

 

In other news, the Grain Board of Iraq is expected to announce within a week a new tender to buy wheat on the international market. The head of the grain board, Khalil Assi told Dow Jones Newswires on Thursday that 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.

 

India also is expected to tender for up to 3 million tonnes of wheat, though one analyst doubts the U.S. will receive much of that business.