November 28, 2005

  

US Wheat Outlook on Monday: Down 1-2 cents on weak e-CBOT, soy calls

  

 

U.S. wheat futures were called to open down 1-2 cents per bushel Monday following weak overnight trade, including a fresh contract low in Chicago Board of Trade nearby wheat contracts and on calls for a 7-9 cent lower open Monday in soybean futures, traders said.

 

News that Egypt, a top U.S. wheat customer, would import more grain from Australia, a formidable competitor, was also bearish, brokers said.

 

The Al Ahram government-owned daily reported Sunday the Egyptian government had been discussing with a visiting Australian delegation ways to activate an agreement signed between the two governments last year to increase Australian imports.

 

The agreement also includes an Australian investment pledge to build a wheat storage facility in the port of Ain Sokhna on Egypt's Red Sea coast, which can hold as much as 150,000 tonnes of wheat.

 

Egypt consumes 12 million to 13 million metric tonnes of wheat a year and imports about half of its needs. Egypt's total wheat purchases for the marketing year running from July 2005 to July 2006 are estimated at 1.3 million metric tonnes. U.S. market share during this period is estimated at 37%, or 470,000 tonnes, according to the latest report from the International Grains Council.

 

In the overnight e-CBOT session, March wheat at the CBOT closed down 2 cents at US$3.10 1/4, a new contract low. December ended down 2 cents at US$2.95, also a fresh contract low.

 

Cash U.S. hard red winter wheat basis bids were steady to weak Monday; soft red winter wheat basis bids were mostly steady; and spring wheat basis bids were steady to weak, with a 10-cent loss in spot Minneapolis grain rail bids, grain merchandisers said.

 

Weekend rains measured about 0.30 to 1.0 inch across Kansas and Nebraska, while blizzard-like conditions were expected to continue through Monday afternoon. The driest areas of Texas and Oklahoma received little precipitation, according to Joel Burgio, forecaster at Meteorlogix weather service. Light rains were expected across the HRW belt Friday.

 

The dry areas of the U.S. soft red winter wheat belt picked up 0.25 to 1.00 inch of rain, with heavier rains seen in Illinois, amid warmer-than-normal temperatures. Forecasts called for mostly dry weather this week, Burgio said.

 

Most of the wheat in the northern regions has fallen dormant, but the rains should help recharge moisture levels across the southern regions and Delta SRW wheat belt, Burgio said.

 

Overnight U.S. wheat export news was quiet.

 

In other wheat news, Egypt's Ministry of Supply and Home Trade announced Sunday that Said Mahmoud Youssef El Hefni will take over as president of Egypt's main state wheat buyer, the General Authority for Supply Commodities, beginning in January.

 

In India, wheat sowings so far this year were up 26.5% on the year, at 10 million hectares, latest government data showed Monday.

 

Therefore, the Indian government said the country's wheat output in calendar year 2006 may exceed the 72 million metric tonnes estimated for this year.

 

The CFTC is scheduled to release its weekly U.S. commitment of trader's data late Monday due to last week's holiday.