March 3, 2006

 

US Wheat Outlook on Friday: Mixed, looking for direction

  

 

Wheat futures at the Chicago Board of Trade are forecast to begin open auction trading mixed Friday as the market searches for direction after Thursday's price strength based on fund buying, floor sources said.

 

In overnight e-CBOT trading, March wheat declined 2 cents to US$3.67 per bushel, May rose 3/4 cent to US$3.81 1/4, and July gained 1/4 cent to US$3.92.

 

Overnight at the KCBT, May slipped 1 1/4 cents to US$4.37 1/2 and July ended unchanged at US$4.43.

 

Fund buying provided direction for the market on Thursday and could provide support if the funds return to buy Friday, a floor trader said. However, outside markets are quiet Friday morning in contrast to Thursday and there is some rain in the forecast for the hard red winter wheat region in the U.S. Central Plains next week which could temper buying interest, the trader added.

 

Very light showers or a few sprinkles are forecast in the southern areas of the hard red winter wheat belt in the U.S. Central Plains Friday. There is a chance for light showers with amounts a trace to 0.25 inch and locally heavier in the central and eastern areas of the region on Saturday with mainly dry conditions on Sunday and Monday, DTN Meteorlogix weather said. There is a chance for scattered showers during Tuesday into Wednesday with rainfall averaging a trace to 0.25 inch in the west to 0.10-0.75 inch and locally heavier in the east, Meteorlogix said.

 

Temperatures are expected to average near to above normal over the next several days in the region, they added.

 

In the eastern U.S., Midwest soft red wheat growing region, the forecast is for mainly dry conditions over the next several days, DTN Meteorlogix weather said.

 

On technical charts, bulls still have technical momentum; however a close below US$3.70 in May CBOT wheat would provide some fresh downside technical momentum, a technical analyst said. First resistance is seen at US$3.82, Thursday's high and then at US$3.86. First support is pegged at US$3.75 and then at US$3.71, Thursday's low.

 

For May KCBT, first resistance is seen at US$4.45 and then at US$4.50. First support is seen at this week's of US$4.30 and then at US$4.25, the analyst said.

 

Cash wheat basis bids were mixed Friday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati down 1 cent at under 21 cents under the May future.

 

Hard red wheat basis bids were mostly unchanged with Hutchinson, Kan., down 6 cents at 18 cents under the May.

 

Hard spring wheat basis bids were mostly unchanged with Minot, N.D., unchanged at 34 cents under the May future.

 

At the CBOT 145 deliveries were posted against the March contract. The customer account of Man Financial issued 63 contracts with the customer account of ABN Amro stopping 41 contracts and the customer account of the USA Trading division of Man Financial stopping 48 contracts.

 

At the KCBT, 10 deliveries were posted against the March contract. The house account of ADM Investor Services issued 10 contracts and the house account of Term Commodities stopped 10 contracts.

 

In other wheat news, Iraq wants to purchase up to 350,000 metric tonnes of wheat from its traditional supplier Australia, but isn't interested in dealing with its traditional supplier, Australian wheat exporter AWB Ltd. (AWB.AU), the Australian government said Friday.

 

Iraq Deputy Prime Minister Ahmad Chalabi confirmed Iraq's interest, with three grower-owned local companies jointly bidding for the wheat tender, Australian Deputy Prime Minister Mark Vaile said.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders report as of Tuesday.

 

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