February 27, 2006

 

US Wheat Outlook on Monday: Steady to down 1 cent, looking for direction

 

 

Wheat futures at the Chicago Board of Trade are forecast to open steady to 1 cent lower as the lack of fresh news and weaker outside markets this morning are expected to keep futures searching for direction, floor analysts said.

 

In overnight e-CBOT trading, March wheat slipped 3/4 cent to US$3.67 1/2 per bushel, May ended unchanged at US$3.80, and July slipped 1/4 cent to US$3.89 1/2.

 

Overnight at the KCBT, March wheat gained 1 cent to US$4.35, and May rose 1 cent to US$4.40 1/2.

 

Overnight the market was quiet, as there was not much fresh news available, a floor analyst said. Outside markets are lower and wheat could be a follower of other markets Monday. The weather in the U.S. central plains remains dry and that could be supportive. It looks like the market could trade both sides Monday, he added.

 

Mostly dry weather is expected through Wednesday in the U.S. central plains with temperatures expected to average well above normal in the period, DTN Meteorlogix weather said.

 

There is a chance for light precipitation in the western sections of the region and the possibility for light or locally moderate showers in the eastern sections on Friday and Saturday, with amounts a trace to .25 inch in the west to 0.25-0.75 in the east, Meteorlogix said. Temperatures will be average above normal in this period, they added.

 

Cash wheat basis bids were mostly unchanged Monday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati unchanged at 7 cents under the March future.

 

Hard red wheat basis bids were also mostly unchanged with Manhattan, Kan., unchanged at 15 cents under the March.

 

Hard red spring wheat basis bids were mostly unchanged with Minot, N.D., 3 cents higher at 36 cents under the March future.

 

According to Friday's CFTC commitment of trader's data, large non-commercial speculators are net short 7,981 CBOT wheat futures contracts as of Feb. 21.

 

In futures and options combined data, large non-commercial traders are net long 8,731 contracts.

 

Large non-commercial traders are net long 48,013 KCBT wheat futures as of Feb. 21 and are net long 51,185 wheat futures and options on futures combined, as of Feb. 21, according to the CFTC.

 

In other wheat news, Iraq's Deputy Prime Minister told Australia's Deputy Prime Minister that Iraq would buy Australian wheat in the future but from suppliers other than monopoly wheat exporter AWB Ltd. (AWB.AU).

 

Ahmad Chalabi, Iraq's Deputy Prime minister, told his Australian counterpart Mark Vaile, "We are ready to buy wheat from Australia but from suppliers outside the Australian Wheat Board," Chalabi was quoted as telling Vaile, who was in Iraq to try to lobby for future purchases of Australian wheat.

 

Last week, Iraq announced that it is about to purchase 1.5 million metric tonnes of wheat from the U.S. and Canada, but excluded Australia from the tender originally announced in January.

 

Prices of wheat delivered to Asia are expected to move lower as trading is expected to slow because of holidays in Taiwan and South Korea later this week, traders said.

 

Domestic wheat prices in China were mostly lower in the week ended Monday as traders anticipate lower prices in the near future, analysts said. Industry sources expect more stocks will enter the market in March as farmers will need money for spring seeding, an analyst with China's National Oils and Grains Information Center said.

 

Monday morning, the U.S. Department of Agriculture is expected to release the weekly export inspections report at 10:00 a.m. CST.