February 13, 2006
US Wheat Outlook on Monday: 1-2 cents lower on consolidation, e-CBOT
Wheat futures at the Chicago Board of Trade are expected to begin open outcry trading 1-2 cents lower Monday, as the market consolidates after last week's rally and weaker prices in overnight activity, sources said.
In overnight e-CBOT trading, March wheat slipped 1 1/4 cents to US$3.54 per bushel, May wheat declined 1 3/4 cents to US$3.65 1/2, and July fell 1/2 cent to US$3.75 1/2.
Overnight at the KCBT, March wheat rose 2 cents to US$4.32 per bushel.
The market looks to consolidate after last week's volatility, said John Kleist of Kleist Ag Consulting, Arlington Heights Ill. It should start off lower after Friday's activity with wheat futures in Kansas City hard red way overbought he said.
Iraq has once morw delayed the results of its tender for wheat, and it looks like the recent high prices might be behind the delay, he added.
On technical charts, the next upside price objective for May CBOT wheat is US$3.84 with a close below US$3.56 providing the bears with fresh downside momentum, a technical analyst said. He pegs first resistance at US$3.72 1/2, Friday's high and then at US$3.76, last week's high. First support is seen at US$3.63, Friday's low and then at US$3.61 1/2, last week's low.
For May KCBT, the next major longer-term upside price objective is the 2002 high of US$4.91, basis nearby futures, the analyst said. It will take a close below US$4.09 to provide downside technical momentum. He pegs first resistance at the contract high of US$4.39 and then at US$4.44. First support is seen at Friday's low of US$4.28 1/4 and then at US$4.25.
Mostly dry weather is expected in much of the central Southern Plains over the next few days with a chance for light precipitation to develop Wednesday through Friday, DTN Meteorlogix weather said.
Temperatures are expected to average near to below normal in the period with precipitation near to below normal in the west and near to above normal in the east, Meteorlogix said.
Cash wheat basis bids were unchanged to mixed Monday morning. Soft red wheat basis bids were unchanged with Evansville, Ind. unchanged at 7 cents under CBOT March.
Hard red winter wheat basis bids were mostly unchanged with Manhattan, Kansas unchanged at 15 cents under KCBT March wheat.
Spring wheat basis bids were unchanged to lower with Minot, N.D. 5 cents lower at 30 cents under MGE March futures.
According to data released Friday by the CFTC, large non-commercial traders are net short 3,127 CBOT wheat futures contracts as of Feb. 7. For CBOT wheat futures and options on futures combined, large non-commercial traders are net long 6,826 futures and options on futures contracts, the CFTC reported.
Large non-commercial traders are net long 52,064 KCBT wheat contracts as of Feb. 7, according to the latest commitment of trader's data and 54,075 wheat futures and options on futures contracts combined, the CFTC reported Friday.
In global wheat news, Egypt's General Authority or Supply Commodities, or GASC bought a combined 180,000 metric tonnes of wheat from Australia and the U.S. It purchased 120,000 metric tonnes of Australian standard white wheat and 60,000 tonnes of U.S. soft white wheat, at US$131/tonne, a GASC general manager told Dow Jones Newswires.
Iraq has again postponed a decision regarding its tender to purchase of up to 1 million metric tonnes of hard wheat. The tender was originally announced in January.
Australia's monopoly wheat exporter AWB Ltd. (AWB.AU) said on Monday that the price for its benchmark wheat grade grown next crop year will rise from current levels for the 2005-06 crop. David Johnson, manager of AWB's national sales pool said new crop estimates have benefited from reduced global stock levels of hard wheat.
China's wheat prices were little changed in the week ended Monday and analyst's don't expect much change for the rest of February. Demand for flour usually shrinks after the Lunar New Year holiday, with demand not expected to pick up until March, the analyst said.
