November 9, 2005

 

US Wheat Outlook on Wednesday: Mixed on weak soy; wheat conditions

 

 

U.S. wheat futures were called to open steady to mixed Wednesday, pressured by calls for a 2-3 cent lower open in Chicago Board of Trade soybean futures, brokers said.

 

Lingering support may be seen from Monday's U.S. Department of Agriculture crop condition data: the U.S. winter wheat crop was 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.

 

Moreover, dry conditions were forecast for the U.S. HRW wheat belt through Saturday, while above-normal temperatures were expected Friday and Saturday.

 

"Above to much-above normal temperatures and below normal rainfall increases stress to developing wheat across Oklahoma and Texas," said Meteorlogix. "Generally favorable conditions (are expected) across Kansas, Colorado, and Nebraska although soils are drying out."

 

Rolling of nearby December wheat futures positions by index funds may again be seen Wednesday ahead of first notice day for deliveries against the front-month U.S. wheat contracts on Nov. 30, they noted.

 

In the overnight e-CBOT session, most-active December wheat at the CBOT closed up 1/2 cent at US$3.13 1/2 per bushel after ending Tuesday nearer the session low on modest short covering in a bear market.

 

"The market is still overdone on the downside, technically, and due for more of a corrective bounce," said Jim Wyckoff, a technical analyst.

 

"The bears are still in firm near-term technical control," he added. "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 wheat was seen at US$3.15 3/4 - Tuesday's high - and then at US$3.18. First support was put at US$3.11 1/2 - Tuesday's low - and then at US$3.08 3/4 - the contract low.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Wednesday with a 12-cent gain in Enid, Okla.; soft red winter wheat basis bids were also steady to firm, with a 10-cent gain in Louisville, Ky., and a 5-cent gain in Evansville, Ind.; and spring wheat basis bids were steady to weak, with a 5-cent loss in Minneapolis rail, grain merchandisers said.

 

Overnight U.S. wheat export business was quiet, while Tuesday's near 2-year high against the euro was bearish for U.S. wheat exports, brokers noted.

 

Traders expected only modest position evening ahead of Thursday's scheduled U.S. Department of Agriculture crop supply/demand report.

 

Old-crop U.S. wheat prices are more dependent on demand issues and new-crop prices should follow wheat condition ratings more closely as the growing season progressed, they said.

 

Analysts on average forecast the USDA would report Thursday 2005-06 U.S. wheat ending stocks at 533 million bushels, up slightly from last month's 530 million bushels.

 

In global wheat news, the French state grains board, Office National Interprofessionnel des Cereales, or ONIC, Wednesday slightly cut its forecast for French soft wheat exports within the EU in the 2005-06 marketing year to 8.65 million metric tonnes from last month's 8.75 million.

 

ONIC estimated 2005-06 French soft wheat output at 35.6 million metric tonnes, little changed from the October forecast of 35.641 million tonnes.

 

Traders continued to keep an eye on harvest and weather reports from Australia and Argentina, two key global wheat exporters.

 

In the U.K., this year's wheat quality was reported to top last year's. Hagberg falling numbers and specific weights were above last year's and the three-year averages, while protein content showed more mixed results, according to the Home Grown Cereals Authority.

 

The "falling number" is a measurement used to determine the soundness of wheat, which is primarily influenced by the degree of sprouting in a grain sample.