November 8, 2005

 

US Wheat Outlook on Tuesday: Up 1-2 cents on technicals, crop conditions

  

 

U.S. wheat futures were called to open up 1-2 cents per bushel Tuesday on a technical rebound from Monday's losses, including a new contract low in Chicago Board of Trade December wheat of US$3.08 3/4 per bushel, brokers said.

 

Some support was also seen from Monday's U.S. Department of Agriculture crop condition data: the U.S. winter wheat crop was only 57% in good to excellent condition as of Sunday, a drop from 61% in that shape last week following dry weather in the key U.S. Southern Plains hard red winter wheat area.

 

Ninety-five percent of the U.S. winter wheat crop had been planted by Sunday, ahead of the long-term average of 92%, while 84% of the crop had emerged, up from the long-term average of 80%, the USDA reported.

 

Dry conditions were expected to persist across the Southern Plains hard red winter wheat belt through Saturday; temperatures were expected to top normal readings from Thursday into the weekend.

 

Still, some grain analysts noted that old-crop U.S. wheat pricing is more dependent on demand news than (2006) crop conditions at this point, while new-crop pricing considers the possibility that good spring growing weather could result in a healthy crop.

 

U.S. wheat traders also kept an eye on lingering rains in Australia's southern two-thirds of New South Wales state.

 

Australia is a major global wheat exporter. Generally, the country's wheat harvest begins in northern areas and moves south to finish near the south coast by year-end.

 

In the overnight e-CBOT session, most-active December wheat at the CBOT closed up 2 1/2 cents at US$3.12 1/4 after setting a contract low and closing near the session low Monday.

 

"The bears are still in firm near-term technical control but the market is still overdone on the downside, technically, and due for more of a corrective upside bounce soon," said Jim Wyckoff, a technical analyst. The 9-day relative strength index for CBOT December wheat was 30, the traditional oversold benchmark, early Tuesday,

 

"It will take a close back above US$3.30 to provide the bulls with a bit of fresh upside momentum," he added.

 

First resistance for CBOT December wheat was seen at US$3.13 1/2 - Monday's high - and then at US$3.15. First support was put at US$3.08 3/4 - Monday's contract low - and then at US$3.08.

 

Cash U.S. hard red winter wheat basis bids were mixed Tuesday, with an 8-cent gain in Lincoln, Neb.; soft red winter wheat basis bids were narrowly mixed; and spring wheat basis bids were also mixed Tuesday, with a 20-cent loss in the Minneapolis rail bids and a 6-cent gain in the Billings, Mont. bid, grain merchandisers said.

 

Overnight U.S. wheat export sales were quiet, while Japan said it would tender Thursday for 142,000 metric tonnes of wheat, including 86,000 tonnes of U.S. wheat.

 

Still, global wheat export competition remained tough.

 

Russia's wheat exports to Egypt in the 2005-2006 marketing season are likely to increase to 3 million metric tonnes from 2 million in 2004-2005, market analyst APK-Inform said in a report Tuesday. Egypt is a top U.S. wheat customer.

 

Syria also said Tuesday that it was tendering to sell 50,000 metric tonnes of wheat for Nov. 15 to Dec. 30 delivery.