September 20, 2006

 

US Wheat Outlook: Up 2-4 cents on e-CBOT, follow-through gains

 

 

Traders and analysts expect U.S. wheat futures to open 2 cents to 4 cents a bushel higher Wednesday on a higher overnight trade, an expected firmer opening in corn and follow-through buying from Tuesday's rally, sources said.

 

In e-cbot trade basis December contracts, Chicago Board of Trade wheat was up 2 1/2 cents at US$4.11 1/2, Kansas City Board of Trade wheat was 1 1/2 cents higher at US$4.82 1/4 and Minneapolis Grain Exchange wheat was up 2 1/2 cents at US$4.59.

 

Traders were impressed by Tuesday's rally that took CBOT December to a one-week high, supported by a bullish cut to the Australian crop estimate. The Australian Bureau of Agricultural and Resource Economics pegged the crop at 16.4 million metric tonnes, which has been hurt by dry weather. The news confirmed ideas that global supplies are tightening and will likely get smaller in the coming months, a trader said. And world carryover stocks are already projected at 25-year lows.

 

If significant rains don't fall in the next seven to 10 days, Australian areas to be harvested for winter crops in November and December could fall to about 2.5 million hectares, from an estimated 4 million now, a crop report issued Wednesday by the New South Wales Department's of Primary Industries said.

 

China's winter wheat acreage will reach 21.3 million hectares this year, down slightly from last year's acreage, the Ministry of Agriculture said Wednesday. Winter wheat production, however, is pegged at 99.3 million tonnes in 2006, versus 91.4 million last year, the China National Grain & Oils Information Center said on its Web site.

 

Farmers in Alberta were 83% finished with the harvest, compared to average progress of about 50% complete at this time. Warm, dry weather allowed the harvest to progress rapidly. Many areas are expected to see yields similar to 10-year averages. Wheat quality was generally favorable, though light bushels weights were reported for cereal crops in some areas.

 

In the U.S. southern Plains, showers will continue to delay seedings but will favor recently planted wheat and improve soil moisture levels, DTN Meteorlogix said. Mostly dry conditions are expected Wednesday, with scattered showers and thundershowers seen on Thursday and Friday. Totals are expected to average 0.50-1.50 inches, favoring northern, eastern and some central areas. Southwestern areas will only see a trace to 0.25 of rain.

 

Traders also anticipate the U.S. will eventually receive new export business from Iraq. An Iraqi wheat trade delegation is in the U.S. to meet with U.S. Department of Agriculture Secretary Mike Johanns on Monday, then will travel to Kansas City on Tuesday before heading to Portland on Wednesday to tour shipping facilities.

 

In export news, Belarus is expected to tender on Oct. 3 for 50,000 tonnes of milling wheat and 80,000 tonnes of feed wheat, along with 50,000 tonnes of feed barley and 100,000 tonnes of feed corn, reports said.

 

Japan seeks 95,000 metric tonnes of milling wheat in a tender to be held Thursday, which will include 50,000 tonnes U.S. wheat, 20,000 tonnes Canadian and 25,000 tonnes Australian. Shipment is scheduled for Nov. 1-30.