December 27, 2005

 

US Wheat Outlook on Tuesday: Down 1 cent on mixed e-CBOT, weak soy call

  

 

U.S. wheat futures were called to open down 1 cent on Tuesday on mixed overnight trade and following calls for a 3-5 cent lower CBOT soybean open, brokers said.

 

U.S. wheat futures markets were closed Monday in observance of Christmas. The markets will close Friday at noon CST and remain closed next Monday for the New Year's Day holiday.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1 1/4 cents at US$3.33 per bushel.

 

First resistance for CBOT March was seen at US$3.36 and then at US$3.41. First support lies at US$3.31 1/4 and then at US$3.29.

 

Potential short-covering at the CBOT, on ideas that long-only index funds may buy wheat early in 2006, may limit losses this week, brokers said.

 

The CFTC reported Friday that speculators for CBOT wheat futures pared their net short position for the week ended Dec. 20. They decreased short holdings by 12,562 lots to hold 100,535 short positions and decreased their long holdings by 654 lots to hold 55,312 long positions.

 

For CBOT wheat futures and options combined, speculators were short 98,783 lots, down 13,248 contracts from the week before, and long 52,499 contracts, down 265 lots from the previous week.

 

For KCBT wheat futures only, speculators for the week ended Dec. 20 boosted their net long stance. They increased their long holdings by 1,996 lots to hold 41,851 long positions and decreased their short holdings by 1,677 lots to hold 7,840 short positions.

 

For KCBT wheat futures and options combined, speculators were long 42,000 lots, up 2,874 contracts, and short 7,863 contracts, down 1,672 lots from the previous week.

 

For MGE spring wheat futures only, speculators for the week ended Dec. 20 also increased their net long position, increasing long holdings by 79 lots to 7,693 lots and decreasing short holdings by 206 lots to 919 lots.

 

For MGE spring wheat futures and options combined, speculators also increased their net long position, increasing long holdings by 41 lots to 7,248 contracts and cutting short holdings by 207 lots to 931 contracts.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Tuesday, with a 4-cent gain in Wichita, Kansas; soft red winter wheat basis bids were mostly steady to narrowly mixed; and spring wheat basis bids were mixed, with a 5-cent loss in Minneapolis and a 3-cent gain in Portland, grain merchandisers said.

 

U.S. wheat export news was quiet.

 

In global wheat news, Ukraine said it would buy 100,000 tonnes of intervention milling wheat for its state reserves before Dec. 29.

 

In India, wheat seedings remained ahead of last year's pace. Sowings covered 22.3 million hectares in the Nov. 1-Dec. 26 period, compared with 21.8 million hectares in the year-earlier period, the ministry of agriculture said Monday.

 

Finally, in Argentina, farmers had harvested 49.2% of the 2005-06 wheat crop by Saturday, down 3% from last year's pace, the Buenos Aires Cereals Exchange reported Monday.

 

The exchange's number differed from Friday's Argentine agriculture secretariat report that farmers had harvested 58% of the crop by Thursday, down from the previous year's 61%.

 

The exchange said Monday the average yield last week was 2.56 tonnes per hectare, down from 2.67 tonnes a week earlier.

 

If the Exchange's forecast holds, it would put output down 30% from a year ago, when farmers produced a record 16.345 million tonnes. Dry weather and low wheat prices led farmers to plant less wheat this year.