November 15, 2005

  

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

  

 

U.S. wheat futures were called to open up 1-2 cents Tuesday on technical buying after Monday's fund liquidation in Kansas City Board of Trade hard red winter wheat futures and on a slight deterioration in the U.S. winter wheat crop's condition, brokers said.

 

"The crop rating being down 1 percentage point might provide a little support," said Shawn McCambridge, a grain analyst at Prudential Financial, late Monday. "However, Kansas is up 4 percentage points from last week."

 

The crop in Kansas, the top U.S. winter wheat growing state, was rated 68% in good to excellent shape as of Sunday, an improvement after recent rains.

 

Overall, 56% of the U.S. winter wheat crop was in good-to-excellent condition, down 1 percentage point from last week, the U.S. Department of Agriculture reported late Monday.

 

Winter wheat conditions in Oklahoma and Texas, also key growing states, declined due to lingering hot, dry conditions. The good-to-excellent rating in Oklahoma fell 6 percentage points to 50%, while Texas' good-to-excellent crop rating fell 6 percentage points to 28% from 34% last week.

 

In the overnight e-CBOT session, December wheat at the Chicago Board of Trade closed up 1 3/4 cents at US$3.13 1/2, while March ended up 4 cents at US$3.32 after closing Monday near the session low.

 

"The bears are still in firm near-term technical control," said Jim Wyckoff, a technical analyst. "However, prices have been trading sideways at lower levels for two weeks, and bulls are hoping some "basing" is occurring. It will take a close back in the CBOT March wheat contract above US$3.40 to provide the bulls with a bit of fresh upside momentum."

 

First resistance for CBOT March wheat was seen at US$3.30 3/4, Monday's high, and then at US$3.33, last week's high. First support was put at US$3.26 1/2, Monday's low, and then at US$3.24 1/2, last week's low, Wyckoff said.

 

The CFTC reported late Monday that speculators for CBOT wheat futures only boosted their net short for the week ended November 8. They increased short holdings by 4,631 lots to hold 96,463 short positions and decreased their long holdings by 1,677 lots to hold 50,384 long positions.

 

For CBOT wheat futures and options combined, speculators were short 96,173 lots, up 4,591 contracts from the week before, and long 49,376 contracts, down 2,661 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended November 8 cut their net long stance. They decreased their long holdings by 3,178 lots to hold 49,309 long positions and decreased their short holdings by 139 lots to hold 6,090 short positions.

 

For KCBT wheat futures and options combined, speculators were long 48,243 lots, down 3,497 contracts, and short 4,615 contracts, up 336 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Nov. 8 remained heavily net long, decreasing long holdings by 707 lots to 8,935 lots and increasing short holdings by 23 lots to 83 lots.

 

For MGE spring wheat futures and options combined, speculators also remained heavily net long, decreasing long holdings by 781 lots to 8,871 contracts and boosting short holdings by 25 lots to 71 contracts.

 

Cash U.S. hard red winter wheat basis bids were steady to narrowly mixed Tuesday; soft red winter wheat basis bids were steady to weak, with a 6-cent loss in St. Louis, Missouri; and spring wheat basis bids were also steady to weak, grain merchandisers said.

 

Overnight U.S. wheat export sales were quiet, while Japan said it would tender for 60,000 tonnes of U.S. wheat Wednesday in an overall tender for 100,000 tonnes.

 

In global wheat news, Syria sold 50,000 tonnes of wheat, including 25,000 tonnes of durum wheat to a Cypriot company for EUR141 per tonne, and 25,000 tonnes of soft wheat to a Yemeni company for EUR115/tonne.

 

Pakistan announced a 3.75% increase in its official wheat procurement price and earmarked 50 million in local currency (US$833,333) for a "grow more wheat" campaign to achieve a target of 22 million metric tonnes for marketing year 2005-06, according to a USDA attach¡¡¨¬¦ report.