December 14, 2005

 

US Wheat Outlook on Wednesday: Up 1 cent on followthrough, funds eyed

 

  

U.S. wheat futures were called to open up 1 cent per bushel Wednesday in a continuation of overnight gains and on expectations for further speculative fund buying, brokers said.

 

Preliminary Chicago Board of Trade wheat open interest reports for Tuesday showed a rise in open interest for the second day in a row, suggesting something more than just short-covering was occurring, they noted.

 

Traders have speculated that long-only index funds may be active in the CBOT agricultural markets in early January; there are some ideas that speculators may be trying to front-run these gains.

 

Little impact was seen from Informa Economics' release Wednesday of a U.S. winter wheat plantings estimate of 41.8 million acres, up from last year's 40.320 million.

 

"Larger acreage was expected, especially in the soft red winter wheat, and I think that card has been played," one CBOT wheat broker said.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 1 cent at US$3.19 1/2 per bushel.

 

First resistance for CBOT March wheat was seen at US$3.19--Tuesday's high--and then at US$3.25. First support was put at US$3.15 and then at US$3.10 1/2--Tuesday's low.

 

There were 197 deliveries posted against CBOT December wheat on Wednesday, with the ADM Investor Services house account stopping all 197 lots.

 

There were no deliveries posted Wednesday against Kansas City Board of Trade and 2 deliveries posted against Minneapolis Grain Exchange December wheat, with the oldest long date of Dec.12.

 

Cash U.S. hard red winter wheat basis bids were steady Wednesday; soft red winter wheat basis bids were steady to firm, with a 3-cent gain in Cincinnati, Ohio; and spring wheat basis bids were steady to weak, with a 10-cent loss in Duluth, Minn. and a 5-cent loss in the spot Minneapolis rail bid, grain merchandisers said.

 

U.S. wheat traders continued to eye forecasts for another potential round of extremely cold air next week across U.S. winter wheat growing regions, with particular concerns about whether the cold will fall in the most vulnerable HRW fields in Oklahoma and Texas.

 

Overnight U.S. wheat export sales were quiet.

 

In global wheat news, the French state grains board, Office National Interprofessionnel des Cereales, or ONIC, Wednesday estimated 2005-06 French soft wheat output at 35.697 million metric tonnes, little changed from the November forecast of 35.600 million tonnes and up slightly from last year's 35.581 million tonnes.