July 6, 2006

 

US Wheat Outlook on Thursday: Mixed; MGE price support continues

 

 

A mixed opening is seen for U.S. wheat futures Thursday, as Chicago and Kansas City markets are expected weaker while the hard red winter harvest wraps up and amid mostly favorable conditions for the soft red harvest. Worries about the hard red spring crop, however, are expected to lift the Minneapolis market, sources said.

 

In overnight trade basis September contracts, Chicago Board of Trade wheat was 1 1/4 cents lower at US$4.03 1/2, Kansas City Board of Trade was down 3 cents to US$5.19 1/4 while Minneapolis Grain Exchange was up 4 1/4 cents to US$5.17 a bushel.

 

Market support continues to come from forecasts for hot, dry weather in the northern Plains and the damage being done to the spring wheat crop. As a result, MGE prices raced to fresh contract highs Wednesday.

 

Mostly dry conditions are forecast this week and into the weekend for the northern Plains, with above- to much-above-normal temperatures, the DTN Meteorlogix weather service said. Scattered, light showers are possible on Monday and weekend temperatures are expected to ease to near to below normal. The reprieve will be short-lived, however, as readings climb back up into the upper 90s Fahrenheit next week.

 

While crop conditions are mostly good in Montana, the upcoming heat and dryness will begin to stress that crop, Meteorlogix said.

 

There are also concerns that the dry conditions in the northern Plains will creep north into Canada's spring wheat areas. While chances for light, scattered showers exist through the weekend, temperatures are expected to rise again by Sunday and Monday and the forecast now is "trending drier," Meteorlogix said.

 

Meanwhile, mostly dry conditions are seen in Midwestern soft red winter areas through Friday, which will allow the harvest to advance. Chances exist, however, for scattered to widely scattered showers over the weekend, with locally heavier amounts on Sunday and Monday.

 

Deliveries posted against CBOT July wheat totaled 108 notices. Featured stoppers included Dowd Wescott at 53 and Iowa Grain with 45, the exchange reported.

 

Just 10 delivery notices were posted at the KCBT; ADM stopped four and J.P. Morgan stopped six.

 

At the MGE, 340 notices were posted, with Country Hedging stopping all of them.

 

Weekly export sales, normally released on Thursday, will be issued on Friday because of the Independence Day holiday this week.

 

In export news, Japan, as expected, bought 40,000 metric tonnes of U.S. wheat for shipment Sept. 1-30. The breakdown included 20,000 tonnes of dark northern spring, 10,000 western white and 10,000 semi-hard wheat. Japan also bought 20,000 tonnes of western red spring from Canada and 20,000 soft white from Australia.

 

Dry conditions across much of Australia's wheat belt suggests an official crop estimate of 22.8 million tonnes could be hard to reach, the National Farmers Federation and Westpac Banking Corp said Thursday. Last year, Australia produced 25.1 million tonnes.

 

Wheat Australia Ltd. officials began Thursday loading the first cargo of a 350,000-tonne wheat shipment to Iraq, marking an end to the export monopoly held by AWB Ltd. Iraq has said that future deals are now off, however, after a shooting incident between Australian security forces and Iraqi government guards. Iraq said it wants an apology while Australian officials say they want to wait until all facts about the incident are known.