December 6, 2005

 

US Wheat Outlook on Tuesday: Steady-Up 1 cent on Iraq hopes, firm e-CBOT

 

 

U.S. wheat futures were called to open steady to up 1 cent per bushel Tuesday on news from Baghdad of an imminent Iraqi purchase of 200,000 tonnes of U.S. wheat, firm overnight trade, and as cold U.S. temperatures linger, stalling farmer wheat sales and prompting concerns about the mostly dormant U.S. winter wheat crop, brokers said.

 

"It's a pretty cold situation for the hard red winter wheat belt during the next couple nights, but the problem is that it needs to be very cold to damage wheat," said Joel Burgio, a meteorologist at Meteorlogix weather service, on Tuesday morning.

 

"Wheat should be able to handle that for the most part," Burgio added. "Some of the weakened plants that went into dormancy not very good shape because of the fall dryness may be hurt by that. In general it's going to be very cold, but probably not enough to cause widespread damage to wheat."

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 1 1/4 cents at US$3.21 1/4 per bushel.

 

First resistance for CBOT March was seen at US$3.24 1/2--Monday's high--and then at US$3.28. First support was put at US$3.18--Monday's low--and then at US$3.15, a technical analyst said.

 

The gains could be tempered by news from India that it planned to sell about 400,000 metric tonnes of wheat in the open market before March 2006 to ensure price stability and ample domestic supplies.

 

U.S. wheat traders have been hoping India will need to import grain before March.

 

"We have enough stocks at hand, and plan to sell at least 100,000 tonnes to flour mills every month from December to March," an Indian official told Dow Jones Newswires.

 

There were 737 deliveries posted against CBOT December wheat on Tuesday, with Henning Carey the largest stopper at 387 lots.

 

There were 77 deliveries and 19 redeliveries posted Tuesday against Kansas City Board of Trade December wheat. Term Commodities stopped all 96 lots.

 

No deliveries were posted against Minneapolis Grain Exchange December wheat on Tuesday.

 

Cash U.S. hard red winter wheat basis bids were steady to firm, with an 8-cent gain in Manhattan, Kan.; soft red winter wheat basis bids were steady to firm, with a 5-cent gain in Kansas City truck bids; and spring wheat basis bids were steady to weak, with 5-cent losses in Minneapolis rail and Grand Forks, North Dakota bids, grain merchandisers said.

 

In other export news, Japan said it would tender for 125,000 tonnes of wheat on Thursday, including 44,000 tonnes of U.S. western white and dark northern spring wheat.

 

In global news, Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) Tuesday said that it export 18.5 million metric tonnes of wheat in 2005-06, and that it will bid for supply of wheat to Iraq as and when the country floats tenders.

 

AWB's managing director also said the company was planning to increase its exports to China in the current year. The company has already sold 2.5 million tonnes wheat to China last year.

 

Moreover, the director said AWB was planning to set trading arms in countries in Eastern Europe and Latin America.