July 14, 2006

 

US Wheat Outlook on Friday: Mixed open seen after hefty losses

 

 

Traders and analysts expect U.S. wheat futures to open mixed Friday on a mixed overnight trade, after prices fell sharply Thursday amid mostly technical weakness, sources said.

 

In overnight trade basis September contracts, Chicago Board of Trade wheat was 1 cent lower at US$3.94 1/2, Kansas City Board of Trade was up 1/2 cent at US$4.94 and Minneapolis Grain Exchange was 1 1/2 cents higher at US$5.07 3/4 a bushel.

 

Early prices weakness is expected in Chicago, but if prices can hold Thursday's lows, "I think the market will try to recover after such a big down move," said Brian Hoops, senior analyst and president of Midwest Market Solutions in Yankton, S.D.

 

"We did have some commercial buying when we went limit-down yesterday, and I think we'll see some more of that because of the crop stress that we've seen," he added.

 

Traders are still watching the weather forecasts for the drought-affected hard red spring wheat crop of the northern Plains, though the adverse conditions look to continue.

 

The prolonged drought "will likely devastate spring wheat yields when the crop is harvested in August," private forecasting firm AccuWeather.com said in a press release. Aside from scattered showers, there is no real relief in sight from the drought. "But at this point, even significant rain would not make much of a difference for this year's crop," said Dale Mohler, AccuWeather.com expert senior meteorologist.

 

Northern Minnesota and extreme northeastern North Dakota received 0.10-.50 inch of rain Thursday, with high temperatures between 88 and 99 Fahrenheit, DTN Meteorlogix said.

 

Mostly dry conditions are forecast for the northern Plains this weekend as readings climb to 105 degrees. There is a chance for scattered thundershowers in eastern areas Monday and Tuesday, as temperatures range from 95-102 degrees.

 

In the eastern Midwest, where farmers are trying to finish harvesting the soft red winter wheat crop, mostly dry conditions mixed with widely scattered showers are forecast for the weekend.

 

Meanwhile, 216 deliveries were posted against CBOT July wheat, with Dowd Wescott stopping 181 and Tenco stopping 35 of them.

 

At the KCBT, 85 deliveries were made, with Term Commodities stopping all of them.

 

No deliveries were reported at the MGE.

 

In export news, South Korea bought 22,500 metric tonnes of U.S. No. 1 wheat Friday, with shipment scheduled from Aug. 15 and Sept. 15.

 

Technically, a weekly low close Friday would deflate market bulls, though a strong price rebound would suggest Thursday's action was a corrective pullback and that the rally can continue, an analyst said.

 

First resistance on Dec CBOT wheat is at US$4.20, then US$4.25, while support is pegged at US$4.15 - Thursday's low - and US$4.10.