May 13, 2005

US Wheat Outlook on Friday: Mixed to down; weather slightly bearish

U.S. wheat futures were called to open mixed to down 1 cent on Friday, with traders focusing on U.S. and global wheat weather outlooks in pre-weekend pricing.
 
In the overnight e-CBOT session, most-active July wheat at the Chicago Board of Trade closed down 1/4 cent at $3.08 1/2.

Weather this week and forecasts remained key, particularly in dry western Kansas, the top U.S. hard red winter wheat-producing state, brokers said.
 
Meteorlogix weather service early Friday said scattered showers and thunderstorms of .10-.50 inch fell overnight in the western HRW belt. Scattered showers and thunderstorms of .25-1.00 inch fell across the east, the service said.
 
The U.S. Department of Agriculture reported late Monday that U.S. winter wheat crop conditions slipped to 59% in good-to-excellent condition from the previous week's 63%. The USDA will release new information late Monday.
 
Mostly dry, cold conditions were expected on Friday and throughout the weekend across the Northern Plains spring wheat region, Meteorlogix said on Friday. Light rains were seen in the west on Monday and Tuesday.
 
Wet and recent cold weather will slow spring wheat planting and emergence across the region, the weather service noted.
 
The USDA on Monday reported that U.S. spring wheat plantings were 80% complete as of Sunday night versus the five-year average of 62%. The crop was 38% emerged versus the five-year average of 32%.
 
U.S. wheat traders also continued to eye weather forecasts for major wheat-producing areas including southeast Australia's New South Wales, the North China Plain and Spain.
 
Chicago Board of Trade, Kansas City Board of Trade and Minneapolis Grain Exchange May wheat futures contracts expire on Friday.
 
"The expirations shouldn't be a factor, with most people already out of their May positions," said Terry Reilly, analyst at Citigroup.
 
Open interest was small early Friday in all three contracts - just 63 lots open in CBOT May, 91 lots in KCBT May, and 3 lots in MGE May, the exchanges reported.

There were 111 deliveries posted against CBOT May wheat early Friday, with the last day assigned of May 12. Customers of USA Blue and Century Group were the stoppers. Registrations were 885 lots, the CBOT said.
 
There were 10 deliveries reported at the Kansas City Board of Trade or zero at the Minneapolis Grain Exchange.
 
Spot cash U.S. winter wheat basis bids fell 2 cents to 3 cents late Thursday while spot cash spring wheat basis bids fell 2 cents to 5 cents, cash sources said.
 
Overnight U.S. wheat export news was quiet. The dollar continued to strengthen early Friday, a bearish factor for U.S. wheat export business, brokers said.
 
In global wheat news, Hungary is nearing a deal to sell 400,000 metric tonnes of grain to drought-stricken Portugal.
 
In technical wheat futures news, July wheat on Thursday closed near the session low and hit a fresh three-month low, inflicting additional chart damage, said Jim Wyckoff, technical analyst.
 
The bears' next downside objective is the February contract low of $3.02 1/4, he said.

"A steep two-month-old downtrend line is in place on the daily bar chart," Wyckoff said. "First resistance is seen at $3.11 and then at $3.13 1/2 - Thursday's high. First support lies at $3.07, Thursday's low, and then at $3.02 1/4."