June 19, 2006

 

US Wheat Outlook on Monday: Softer start on overnight weakness

 

 

A softer start is expected for U.S. wheat markets Monday, as weakness overnight and expected lower trade in Chicago Board of Trade.

 

In e-cbot trade July wheat futures were 2 cents lower at US$3.57 a bushel.

 

Wheat futures are called to open 1-2 cents weaker.

 

"We're still in harvest. The rain won't help the hard red winter wheat, but it sure can help the spring wheat," said Sid Love of Joe Kropf/Sid Love Consulting, Overland Park, Kan.

 

DTN Meteorologix weather service said over the weekend the central and southern Plains saw widespread moderate to heavy storms which should delay harvest early this week.

 

For Monday and Tuesday, dry skies are seen generally, with only a few isolated thundershowers. On Wednesday scattered showers of 0.25-1.00 inch, are forecast through northern areas during Wednesday, with temperatures average near to above normal. By the week's end, scattered showers and thunderstorms during Thursday and Friday are seen from northern and eastern Kansas to Nebraska and northeast Colorado, with temperatures average near to above normal.

 

The 6-10 day outlook calls for temperatures to average near to above normal in the west, and near to below normal east. Rainfall should average near to below normal west, near to above normal east.

 

Love said lower outside markets could have some impact on wheat, although he said doubts the market will see sharp losses.

 

Love said CBOT wheat is likely to remain under pressure until after July wheat contract goes through the delivery process. First notice day is June 30.

 

"There should be a lot of deliveries in Chicago and Toledo because the basis is so weak. Once we get that out of the way we can start concentrating on the demand side of equation," he said.

 

Mild support for wheat is expected after Egypt's purchase of 230,000 metric tonnes U.S. and Canadian wheat. The U.S. garnered the lion's share of the buy, garnering all by 55,000 tonnes. Egypt bought soft white wheat and soft red wheat. The shipment date is middle to end of July.

 

Australian exporter AWB Ltd. Monday cut its estimate of returns from pooled export sales for the new wheat crop following a drop in international wheat values. It now estimates benchmark Australian Premium White wheat of 10.5% protein will return AUS$220 a metric tonne, before costs, free on board, down AUS$2 from a review two weeks earlier. The estimates for most other grades have been cut by AUS$2 or AUS$3.

 

Love said the Australian crop is developing well and the Canadian crop appears to be larger due to bigger planted acreage.