June 27, 2006

 

US Wheat Outlook on Tuesday: Up on spring wheat conditions, e-cbot

 

 

A firmer start Tuesday for U.S. wheat futures is expected as spring wheat conditions continue to decline in the northern Plains and Chicago Board of Trade wheat futures rose in evening trade.

 

Most-active September wheat is called to open 1-2 cents a bushel higher.

 

In overnight trade on e-cbot, July wheat gained 1 1/2 cents to US$3.70 and September wheat rose 1 3/4 to US$3.87 1/2.

 

The U.S. Department of Agriculture, in its weekly crop progress report released Monday afternoon, noted U.S. spring wheat conditions were at 57% good-to-excellent condition in, down three percentage points from the previous week's average and down 20 percentage points from last year's average at this time. The decline follows the sharp fall in condition ratings in the June 19 report and underscores the toll excessive hot and dry weather is having on wheat crops.

 

South Dakota is experiencing the brunt of the poor growing weather. While there was a three percentage point increase in the crop's good-to-excellent rating condition, only 23% of South Dakota spring wheat is in that state. North Dakota's spring wheat crop fell five percentage points to 57% in good-to-excellent condition.

 

"That seems to be driving the market right now," said Sid Love of Joe Kropf/Sid Love Consulting, Overland Park, Kan.

 

DTN Meteorologix said it's not likely the northern spring wheat regions will see much relief as they forecast the hot and dry weather in western spring wheat areas will increase stress during this week. The eastern wheat areas will not be as hot or as dry.

 

USDA also noted winter wheat harvest is just over the halfway mark, at 53% done, up 13 percentage points from last year. Kansas, the top-producing winter wheat state, saw a 28 percentage-point rise to 81% of the crop cut.

 

Meteorologix said there are no significant concerns for the harvest in the southern Plains as thundershowers, if any, will occur with low coverage during the next 5 days.

 

Love and other floor sources said that as the days draw nearer to Friday's acreage report from USDA, the focus will move to ideas on the size of the spring wheat and durum acres. Most analysts believe there will be an increase in acreage. Love said given the recent gains in wheat, the technical chart picture is also positive, which could underpin the market.

 

In other news, the row over a quality issue between Australian wheat exporter AWB Ltd. and India's State Trading Corp. are resolved, clearing the way to resume shipping almost 1 million metric tonnes of wheat, AWB spokesman Peter McBride said Tuesday.

 

Khalil Assi, head of the Grain Board of Iraq, told Dow Jones Newswires the June 21 shooting of Iraqis, including bodyguards of the trade minister, by Australian troops won't impact wheat purchases from the country. Assi said the purchase of 350,000 metric tonnes of Australian wheat, concluded only few days before the incident, was also unaffected.

 

In export news, Taiwan Flour Millers' Association bought 40,500 metric tonnes of U.S. wheat for an August.