August 11, 2006

 

US Wheat Outlook on Friday: Down on US output data

 

 

U.S. wheat futures are called to open steady to weaker Friday, in reaction to the U.S. Department of Agriculture's crop production and supply/demand reports as U.S. production figures are deemed bearish, but world data are considered price-supportive.

 

Benchmark Chicago Board of Trade September wheat is called to open 1 to 2 cents a bushel lower to start.

 

In e-cbot overnight trade, September wheat was up 2 1/2 cents at US$3.89 a bushel and December wheat gained 1 cent to US$4.08 1/2.

 

The USDA said in its August crop production and supply/demand report it estimated the all-wheat figure at 1.801 billion bushels. This compares to a survey of trade estimates by Dow Jones Newswires, which expected a crop of 1.765 billion bushels, and is down from the July figure of 1.806 billion.

 

All winter is pegged at 1.283 billion bushels, versus a trade guess of 1.284 billion bushels. This is up from July's 1.280 billion.

 

Other spring wheat is estimated at 463 million, while the trade was expecting 428 million bushels; Friday's data is down from July's figure of 465 million.

 

The durum crop is put at 54.7 million bushels versus the trade estimate of 56 million bushels and is down from the July estimate of 60 million.

 

New-crop wheat carryout is estimated at 434 million bushels while the trade expected a figure of 408 million bushels. In July new-crop stocks were pegged at 438 million bushels.

 

The USDA didn't change any line items in the supply/demand balance sheets and took the drop in carryout from the lower all-wheat production figure.

 

"The other spring wheat data were a surprise. The market was looking for a bullish supply figure and it didn't get it from the U.S. numbers. It did get it from the world figures," said John Kleist of Kleist Agricultural Consulting. "The world figures are a downside limiting factor."

 

New-crop world wheat carryover is estimated at 128.4 million metric tonnes, versus the July estimate of 133.2 tonnes. Expectations were for a drop in some world production. USDA estimated Canada's 2006-07 wheat crop at 25.5 million tonnes versus 26.5 million tonnes last month. Australia's 06-07 wheat crop is seen unchanged versus July's estimate of 21.5 million tonnes. EU-25 wheat came in at 119.35 million tonnes compared to last month's estimate of 126.10 million tonnes. Argentina's wheat crop was lowered to 13.5 million tonnes versus July's figure of 14.30 million tonnes.

 

The drop in the European Union wheat figures was a surprise, Kleist said.

 

"I never saw any numbers like that coming out of Europe before this report," he said.

 

Export-wise, he said, this will keep demand very tight "and could spook importers," he added.

 

In other news, DTN Meteorlogix weather firm said the forecast for the North Plains hasn't changed much, with generally favorable conditions for the harvest of the drought-reduced crop. Rain over the weekend will cause some disruptions before favorable harvest weather returns the first half of next week.

 

In the Southern Plains more rain is needed for the upcoming planting season after a summer of hot/dry weather depleted soil moisture. Some scattered showers and thunderstorms are expected during the first half of next week but it will not be enough to end concerns.

 

In export news, Ukraine exported 509,142 metric tonnes of wheat in June, which is 2.2 times the amount exported in June 2005 and 16.1% more than was exported in May, the State Statistics Committee said Friday. The largest wheat exports in June went to Egypt, 90,929 tonnes, Tunisia, 49,451 tonnes, Bangladesh, 19,983 tonnes, and Italy, 16,860 tonnes.

 

Tajikistan harvested 300,000 metric tonnes of wheat to Aug. 10 on 183,135 hectares, which is 65.3% of the total area to be harvested, with an average yield of 1.75 tonnes a hectare, the agriculture ministry said Friday.

 

In other data news, the French Ministry for Agriculture and Fisheries Friday forecast domestic 2006-07 soft wheat production at 33.6 million metric tonnes, a cut of 1.7 million from its July estimate and down 3.6% from the 2005-06 crop. This was just 0.7% below the previous five-year average. Intense heat and dry conditions this summer have lowered winter grain yields in numerous regions, the Ministry said.

 

French soft wheat yields are now projected to be down 3.5% on the year with near stable area. The compares with the Ministry's July estimate, before the bulk of the summer heat stress, which had projected a 1.1% rise in soft wheat yields.