June 13, 2006

 

US Wheat Outlook on Tuesday: Down 1-2 cents on harvest, outside markets

 

 

U.S. wheat futures were called to open down 1-2 cents Tuesday following weak overnight trade on lingering U.S. winter wheat harvest pressure and following weak precious metals futures markets, brokers said.

 

Rolling of nearby wheat futures positions ahead of the June 30 first notice day for deliveries against the three U.S. wheat futures contracts was also expected, said Sid Love, of Kropf & Love Consulting. The U.S. Department of Agriculture late Monday reported the U.S. winter wheat was 21% harvested, up 12 percentage points from the previous week and matching last year's pace.

 

The harvest figure was also 10 percentage points ahead of the five-year average following a lingering drought in the U.S. Plains.

 

The harvest was 15% complete in Kansas, the top U.S. winter wheat growing state, while Oklahoma farmers had cut 81% of their crop, the USDA said.

 

Ninety-five percent of the U.S. winter wheat crop was headed and 29% of the crop was in good to excellent shape, up slightly from the previous week.

 

The USDA reported the amount of U.S. spring wheat in good-to-excellent condition fell two percentage points last week to 67%.

 

In the overnight e-CBOT session, most-active July wheat closed down 3/4 cent at US$3.73 per bushel.

 

"Prices Monday closed near the session low," a technical source said. "It still appears a near-term market top is in place--especially given Friday's big losses. The next downside price objective for the bears is solid technical support at last week's low of US$3.71. It will take a close back above resistance at US$4.00 to provide the bulls with any fresh upside technical momentum."

 

First resistance for CBOT July wheat was seen at US$3.79 1/2--Monday's high--and then at US$3.85. First support was put at US$3.73--Monday's low--and then at US$3.71--last week's low.

 

Kansas City Board of Trade July wheat ended overnight closed down 3 1/2 cents at US$4.76 per bushel.

 

"Prices closed near the session low in quieter trading," a technical source said. "The bears still have some downside technical momentum. Their next downside objective is closing prices below support at the April high of US$4.71 1/2. It will take a close back above major psychological resistance at US$5.00 a bushel to provide the bulls with fresh upside technical momentum."

 

First resistance for KCBT July wheat was seen at US$4.87--Monday's high--and then at US$4.95. First support was put at US$4.74--last week's low--and then at US$4.71 1/2.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Tuesday; soft red winter wheat basis bids were steady to weak; and spring wheat basis bids were also steady to weak, grain merchandisers said.

 

In U.S. wheat export news, three South Korean flour millers sought 24,000 tonnes of U.S. wheat in a tender that will end Wednesday; and Japan sought 40,000 tonnes of U.S. wheat in an overall tender for 90,000 tonnes.

 

In global wheat news, Syria canceled its tender to sell 50,000 tonnes of wheat.