July 17, 2006

 

US Wheat Outlook on Monday: 1-2 cents higher on weather, export news

 

 

U.S. Wheat futures are expected to begin open auction trading 1-to-2 cents higher Monday as extremely hot temperatures in the hard red spring wheat belt in the northern plains over the weekend and ideas that Monday afternoon's crop progress report will show continued deterioration of the crop is expected to support prices, sources said.

 

In addition, export sales of U.S. white wheat to Egypt over the weekend is seen as providing additional support, they added.

 

In overnight trading at the Chicago Board of Trade, September wheat gained 2 1/4 cents to US$3.99 3/4 per bushel, in Kansas City, September hard red wheat rose 4 1/4 cents to US$4.99 3/4, while at the Minneapolis Grain Exchange, September wheat ended up 5 cents at US$5.12.

 

The market should start out higher, a floor analyst said. The U.S. Plains are still extremely hot, crop conditions should be lower after the weather received last week and the U.S. sold wheat to Egypt over the weekend, he added. Scattered talk of interest in U.S. wheat from Iraq was also viewed as supportive, he added.

 

Traders expect wheat conditions to decline 2-to-5 percentage points from last week.

 

Dry weather with only a few light and/or isolated showers are expected in U.S. hard red spring growing areas over the next five days, DTN Meteorologix Weather said. Temperatures are expected near to above normal early in the period, above to well above normal mid-period and near to above normal at the end of the period.

 

In the 6-to-10 day outlook, temperatures are expected above to much-above normal and rainfall near to below normal.

 

Egypt's General Authority for Supply Commodities, GASC, reported Saturday that it purchased 180,000 metric tonnes of U.S. and Russian wheat. Egypt purchased 120,000 metric tonnes of U.S. soft white wheat and 60,000 tonnes of Russian wheat.

 

Large non-commercial traders are net long 14,915 CBOT futures and options on wheat futures as of July 14, the Commodity Futures Trading Commission reported Friday. Non-Commercials boosted their long positions by 7,272 contracts and decreased their short positions by 3,385 contracts.

 

At the KCBT, large commercial traders added 8,905 contracts to their short futures and options on futures positions and are now net short 71,211 contracts as of July 14, the CFTC reported.

 

On technical charts, bulls have lost their upside technical momentum in CBOT December wheat, a technical analyst said. First resistance is seen at US$4.18 1/4 and then at US$4.25. First support is at US$4.10 and then at US$4.05.

 

In December KCBT wheat, first resistance is seen at US$5.15 and then at US$5.20. First support is seen at US$5.03 and then at US$5.00.

 

Monday morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CDT.