March 8, 2006

  

US Wheat Outlook on Wednesday: 1/2-1 cent lower on weaker outside markets

 

 

U.S. wheat futures are expected to begin trading 1/2 to 1 cent lower Wednesday as sharply lower outside markets and the lack of fresh news are expected to exert downward influence on the opening, floor sources said.

 

In overnight e-CBOT trading, March wheat rose 1/2 cent to US$3.71 per bushel, May fell 1 1/4 cents to US$3.79 3/4, and July dropped 1 cent to US$3.91.

 

Overnight at the KCBT, May rose 1 1/4 cents to US$4.40, and July gained 2 cents to US$4.44 per bushel.

 

The market should see some pressure from outside markets to start, a floor analyst said. Gold, silver and energies are all sharply lower this morning he said.

 

However, trading could be two-sided as the funds were good buyers of wheat on Tuesday and wheat could see some support if they return, he said.

 

In addition, the forecast for the U.S. Central Plains looks as if the rain forecast will be mainly in the eastern sections of the region, he added.

 

Near-term weather forecast for the U.S. Central Plains is calling for scattered showers and thundershowers, with amounts of .25-1.00 inch and locally heavier are forecast through eastern Kansas, eastern and southern Oklahoma and north-central Texas Wednesday through early Thursday morning, DTN Meteorlogix weather said. Mainly dry conditions are expected Saturday with a chance for precipitation to return in northern and eastern areas during Sunday into Monday, Meteorlogix said.

 

Temperatures will average near-to-above normal in much of the region Wednesday through Friday, Meteorlogix added.

 

In the U.S. eastern Midwest, rain and possible thunderstorms are forecast Wednesday and Thursday in Illinois, Wisconsin and western Michigan before drier weather returns on Friday. Rainfall could be as heavy as .50-2.00 inches in the period, Meteorlogix said. Temperatures are expected to average above normal in the period.

 

On technical charts, it will take a close below US$3.71 in CBOT May wheat to provide bears with fresh downside technical momentum, a technical analyst said. First resistance in CBOT May wheat is seen at US$3.85 1/4 and then at US$3.90 1/2. First support sits at US$3.78 and then at US$3.74, this week's low.

 

For May KCBT wheat, first resistance is seen at US$4.45, Tuesday's high and then at US$4.50. First support is seen at US$4.34 1/2, this week's low and then a US$4.30, last week's low, the analyst said.

 

Cash wheat basis bids were mixed Wednesday morning. Soft red wheat basis bids were mostly unchanged with Cincinnati unchanged at 27 cents under the May future.

 

Hard red wheat basis bids were mostly unchanged with Hutchinson, Kan. 1 cent higher at 17 cents under the May.

 

Hard spring wheat basis bids were unchanged with Minot, N.D. unchanged at 35 cents under the May future.

 

At the CBOT, 55 contracts were issued for delivery against the March contract. The house account of ADM Investor Services issued 40 contracts with the customer account of ABN Amro stopping 31 contracts.

 

At the MGE, 90 contracts were issued for delivery against the March contract. Country Hedging issued 77 contracts for delivery, with ADM Investor Services stopping 77 contracts.

 

In other wheat news, Iraq is seeking to buy up to 500,000 metric tonnes of Australian wheat, but from suppliers different from Australian monopoly wheat exporter AWB Limited (AWB.AU), the head of the Iraqi Grain Board said Wednesday.

 

Khalil Assi, the head of the Grain Board said that Iraq wants to buy a total of 1.5 million metric tonnes of wheat. Included in this amount are the 500,000 metric tonnes purchased from Canada and 150,000 tonnes purchased from the U.S. last week. Iraq is also looking to purchase up to 150,000 metric tonnes of wheat from Germany as part of this purchase.