June 23, 2006

 

US Wheat Outlook on Friday: Flat-down 1 cent on follow-through, e-CBOT

 

 

Analysts expect Chicago Board of Trade wheat futures to open steady to 1 cent a bushel lower Friday on follow-through selling from recent losses and a steady to weak overnight trade, sources said.

 

In overnight e-cbot trade, most-active September wheat was down 1/4 cent to US$3.82.

 

However, Minneapolis may see some price strength as weather forecasts for the major spring-wheat-producing states point to below-normal rainfall and above normal temperatures, said Brian Hoops, senior market analyst and president of Midwest Market Solutions in Yankton, S.D.

 

"For those areas, we're looking at a bullish weather forecast. Because that market is in the heading stage, we need cooler temperatures and more moisture and that's not in the forecast," he said.

 

The USDA this week dropped its spring wheat rating by 7 percentage points to 60% good to excellent in response to the hot, dry weather pattern.

 

Though the overall winter wheat harvest is running well ahead of normal at 38% harvested as of last Sunday, rainy weather this week has caused delays in Kansas. The past 24 hours brought scattered showers and thunderstorms to parts of Kansas and areas south in the hard red winter wheat belt, the DTN Meteorlogix weather service said.

 

Frequent shower and thunderstorm activity is expected to continue interrupting the harvest, Meteorlogix said.

 

Meanwhile, a steady to firmer U.S. dollar may provide pressure in the grain markets, a trader said.

 

A lower open for crude oil and weakness in gold and silver could also exert speculative-type selling in the grain and oilseed pits.

 

Technically, July CBOT wheat sees solid technical support at the US$3.51 March and April low. A close below that level would open the door to further downside pressure. A close above US$3.80 resistance, however, would provide bulls with fresh momentum. First resistance is placed at US$3.72, then US$3.75. First support is seen at US$3.65, then US$3.60.

 

In other news, U.S. firms placed bids in a 2.2 million metric tonne wheat tender issued by India last week. At least one of the U.S. bidders was selling U.S.-origin wheat, U.S. Department of Agriculture officials told Dow Jones Newswires on Thursday.

 

Officials believe U.S. exporters will have better chances to sell wheat to India after negotiations between the two countries resulted in modifications to prohibitive Indian specifications.

 

The Canadian Wheat Board left its monthly price projections for most grades of wheat to be sold during the 2006-07 crop year unchanged. Durum levels, however, were raised by CUS$1 per tonne.

 

Durum levels were raised due to adverse weather delaying crop maturity and the harvest in North Africa. While North American durum stocks are large, lower planted area is expected to lead to reduced stocks next year, the CWB said.