September 11, 2006

 

US Wheat Outlook on Monday: 1-2 cents lower; India does not buy US wheat

 

 

U.S. wheat futures expected to open 1-2 cents a bushel lower Monday on a steady to weak overnight trade and on news that India chose not to purchase any U.S. wheat amid plans to buy a 1.67 million metric tonnes from other countries, sources said.

 

In overnight trade basis December contracts, Chicago Board of Trade wheat was down 2 1/4 cents at US$4.13 1/4, Kansas City Board of Trade was down 1/4 cents to US$4.80 and Minneapolis Grain Exchange was 1/2 cent lower at US$4.61 1/4 a bushel.

 

Market participants are disappointed that no export business is likely coming from India, which is expected to pressure futures prices at the open, said Brian Hoops, president of Midwest Market Solutions in Yankton, S.D.

 

India on Saturday finalized offers to buy 1.67 million tonnes of wheat from four international firms at around US$223-US$238 a tonne. In tenders dating back to February, India plans to purchase a mammoth 5.5 million tonnes - 3.5 million tonnes in the first phase and 2 million tonnes in the second. India also cut the customs duty on private imports to zero, from 5%, until Dec. 31, a move to try and boost supplies and to help reign in rising local prices by bread, flour and biscuit manufacturers through imports.

 

Hoops added, however, that the market is expecting some constructive fundamental news in Tuesday's release of the U.S. Department of Agriculture's September crop production and supply/demand reports, which may provide support later in the session.

 

Dry weather in Australia is expected to slash wheat production there. A recent estimate from commodities manager and trader Emerald Group Australia said the crop could be as low as 13 million tonnes if growing conditions continue to deteriorate, which would represent about half of last year's output of 25.1 million tonnes.

 

Australian wheat exporter AWB Ltd. on Monday raised its estimate of gross returns from pooled sales of new-crop benchmark Australian Premium White grade of 10.5% protein by AUS$6 per metric tonne to AUS$228/tonne. Most other new-crop grades were raised by the same amount.

 

Russia is able to export 10 million tonnes of grain in the 2006-07 marketing year, the government said. The grain harvest this year is expected to total 73 million to 74 million tonnes, which would be sufficient to meet the export requirement.

 

China's wheat prices were mostly flat last week, though trading volumes continued to increase in northern provinces. Wheat prices in major producing regions were quoted from RMB1,380-RMB1,440 a tonne.

 

Meanwhile, wheat deliveries totaled 64 at the Chicago Board of Trade, 62 of which Banc of America Securities stopped and two by Tenco.

 

Deliveries at the Kansas City Board of Trade totaled 283, while five were posted at the Minneapolis Grain Exchange.