November 7, 2005

  

US Wheat Outlook on Monday: Down 1/2-1 cent on weak e-CBOT, soy

 

 

U.S. wheat futures were called to open down 1/2 cent to 1 cent per bushel Monday on follow-through selling after last week's losses and weak overnight trade, and on calls for a 2 to 4 cent opening loss in soybeans, brokers said.

 

In the overnight e-CBOT session, most-active December wheat at the Chicago Board of Trade closed down 1/4 cent at US$3.11 after matching last week's contract low of US$3.10 per bushel. The nearby futures contract Friday closed near the session low and at the weekly low close.

 

"The bears are still in near-term technical control but the market is still overdone on the downside, technically, and due for a corrective upside bounce soon," said Jim Wyckoff, a technical analyst. "It will take a close back above US$3.30 to provide the bulls with a bit of fresh upside momentum."

 

First resistance for CBOT December was seen at US$3.15 1/2 - Friday's high - and then at US$3.17 1/4, Wyckoff said. First support was seen at US$3.10 - the contract low-and then at US$3.08. U.S. wheat export sales during the weekend were quiet, offering little supportive fundamental news.

 

Cash U.S. hard red winter wheat basis bids were steady to weak, with an 11-cent drop in Enid, Okla.; soft red winter wheat basis bids were mixed, with a 20-cent gain in Evansville, Ind. and a 6-cent loss in Cincinnati, Ohio; and spring wheat basis bids were steady to firm, with a 5-cent gain in Minneapolis, grain merchandisers said.

 

U.S. wheat traders noted recent dry conditions across the U.S. hard red winter wheat belt should be followed by scattered rains in the central and southern belt Wednesday.

 

The U.S. Department of Agriculture will update late Monday its crop condition report. Last Monday, the USDA said the U.S. winter wheat crop was 61% in good to excellent shape.

 

In global wheat news, a commodity analyst at Commonwealth Bank of Australia said Monday that Australia's bumper wheat crop could be at risk from too much rain.

 

If a large portion of the new crop is damaged by rain and downgraded to feed status, this would put added pressure on an already wide global price spread between hard and soft wheat, the analyst noted.

 

In top global wheat producer China, wheat prices in major producing regions fell slightly after two wheat auctions late last week, reflecting some supply concerns, with demand at normal levels, traders said.

 

The CFTC reported late Friday that speculators for CBOT wheat futures only sharply boosted their net short for the week ended Nov. 1. They increased short holdings by 11,504 lots to hold 91,832 short positions and increased their long holdings by 2,465 lots to hold 52,061 long positions.

 

For CBOT wheat futures and options combined, speculators were short 91,582 lots, up 12,201 contracts from the week before, and long 52,037 contracts, up 1,871 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended November 1 increased their net long stance. They boosted their long holdings by 154 lots to hold 52,487 long positions and decreased their short holdings by 503 lots to hold 6,229 short positions.

 

For KCBT wheat futures and options combined, speculators were long 51,740 lots, up 119 contracts, and short 4,279 contracts, down 163 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Nov. 1 remained heavily net long, decreasing long holdings by 537 lots to 9,642 lots and decreasing short holdings by 100 lots to 60 lots.

 

For MGE spring wheat futures and options combined, speculators also remained heavily net long, decreasing long holdings by 531 lots to 9,653 contracts and cutting short holdings by 85 lots to 46 contracts.