July 19, 2006

US Wheat Outlook on Wednesday: 3-5 cents lower following overnight tone

U.S. wheat futures are expected to begin open auction trading 3-5 cents lower Wednesday as follow through weakness from overnight trading is expected to press futures on the opening, sources said.

In overnight trading at the Chicago Board of Trade, September wheat fell 4 3/4 cents to US$3.93 1/4 per bushel, in Kansas City, September hard red wheat fell 2 1/4 cents to US$4.88, while at the Minneapolis Grain Exchange, September wheat ended down 2 cents at US$4.98.

The market should start off lower following the overnight theme, a CBOT-based floor analyst said. There could be some technical liquidation in both the hard red and hard red spring markets, despite the continued hot and dry weather in the U.S. Northern Plains. Although there might be some scattered showers in the region, the crop is not expected to derive much benefit from it, he added.

Mostly dry weather with only a few light showers mainly in the south are forecast for Wednesday through Friday in the U.S. Northern Plains, DTN Meteorologix Weather said. Temperatures are predicted average above to well above normal with highs ranging from 85 degrees to 105 degrees Fahrenheit. Mainly dry weather is expected over the weekend with temperatures averaging from the low 90's F to the low 100's degrees.

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

Talk that Iraq is interested in purchasing wheat has surfaced over the past several days, however, the recent high prices has trimmed interest in U.S. wheat, floor sources said. "Don't hold your breath" about the Iraq talk as past history has shown that any wheat exports to Iraq could take some time, another floor analyst said.

On technical charts, it will take a close above technical resistance at US$4.25 to revive the bulls in CBOT December, a technical analyst said. First resistance is seen at US$4.18 1/2, Tuesday's high and then at US$4.22 1/2. First support is pegged at US$4.11 and then at US$4.10.

In December KCBT wheat, prices closed lower and hit a three-week low and bears have gained some downside technical momentum, the analyst said. The bears next downside objective is closing prices below major psychological support at US$5.00. First resistance is seen at Tuesday's high of US$5.07 1/2 and then at US$5.10. First support is seen at US$5.00 and then at US$4.95.

Cash wheat basis bids were unchanged to mostly lower Wednesday morning. Hard red winter wheat bids were unchanged to lower with Hutchinson, Kan., unchanged at 11 cents under Sep KCBT.

Spring wheat basis bids were unchanged to lower with Aberdeen, S.D., down 10 cents at 25 cents under Sep.

Soft red wheat bids were mostly unchanged with Evansville, Ind., unchanged at 65 cents under September.

In other wheat news, New South Wales Farmers Association, a key Australian lobbying group backs a wheat export monopoly operated by agribusiness AWB Ltd, (AWB.AU), as long as there is improved governance of its international unit.

Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 30,000 metric tonnes of feed wheat in a tender to be concluded July 26, a ministry official said Wednesday.