May 12, 2006

 

US Wheat Outlook on Friday: Up 5-15 cents on bullish USDA data

 

 

U.S. wheat futures were called to open up 5-15 cents per bushel Friday following bullish U.S. Department of Agriculture 2006 U.S. and world wheat production and ending stocks data, brokers said.

 

"Up 10-15 (cents)," said Terry Reilly, a grain analyst for Citigroup, while CBOT grain traders called U.S. wheat futures to open up 5-10 cents per bushel.

 

Reilly said the USDA's 2006-07 world wheat end stocks topped his estimate but were still down 15.6 million bushels from the previous year.

 

"New crop U.S. (wheat production of) 1.873 billion bushels is 76 million (bushels) below the trade average," he added. The USDA's 2006-07 U.S. wheat production figure compares with estimated 2005-06 U.S. wheat production of 2.105 billion bushels.

 

The USDA estimated all-winter wheat production at 1.323 billion bushels in 2006-07, lower than the 1.499 billion bushels produced in 2005-06, and 50 million bushels below the 1.373 billion bushels average analyst estimate.

 

U.S. hard red winter wheat production was projected at 714.9 million bushels, well below the 930 million bushels produced last year and the average analyst estimate of 745 million bushels.

 

In Kansas, the nation's No. 1 wheat-producing state, winter wheat production was pegged at 319.6 million bushels, lower than the 380.0 million bushels produced last year.

 

U.S. 2006 wheat ending stocks were seen at 447 million bushels, down from the latest prediction of 547 million bushels for 2005-06.

 

U.S. 2006-07 wheat exports were expected to drop by 100 million bushels to 900 million bushels from the latest one-billion-bushel prediction for 2005-06.

 

World wheat ending stocks for 2006-07 were seen at 128.1 million metric tonnes, down from an estimated 143.7 million tonnes for 2005-06.

 

In the overnight e-CBOT session, most-active July wheat closed up 1 1/2 cents at US$3.93 1/2 per bushel.

 

"Bulls still have solid technical power," a technical source said. "The next upside price objective for the bulls is strong resistance at the contract high of US$4.00 a bushel. It would take a close below solid support at US$3.70 to provide the bears with fresh downside technical momentum."

 

First resistance was seen at US$3.92 1/2--Thursday's high--and then at US$3.96. First support was put at US$3.85--Thursday's low--and then at US$3.80.

 

Kansas City Board of Trade July wheat ended overnight up 2 1/4 cents at US$4.73 3/4 per bushel.

 

"The next major upside price objective for the bulls is major psychological resistance at US$5.00 a bushel," a technical source said. "A close below the late-April low of US$4.26 would provide the bears with fresh downside technical momentum."

 

First resistance for KCBT July wheat was seen at US$4.74 1/2--the contract high--and then at US$4.80. First support was seen at US$4.65 and then at US$4.62 1/2.

 

There were 184 deliveries posted Friday against CBOT May wheat futures with a customer of ABN Amro stopping 96 lots. The last date available was May 11. Wheat registrations late Thursday at the CBOT totaled 1,665 lots, unchanged from the previous day.

 

There were 15 redeliveries of KCBT wheat Friday and no deliveries of MGE wheat.

 

Cash U.S. hard red winter wheat basis bids were mixed Friday, with a 3-cent gain in Portland and a 2-cent gain at the Texas Gulf; soft red winter wheat basis bids were steady; and spring wheat basis bids were mixed, with a 2-cent loss in Aberdeen, South Dakota and a 2-cent gain in Minot, North Dakota, grain merchandisers said.