March 27, 2006
US Wheat Outlook on Monday: Steady to up 1 cent, looking for direction
U.S. wheat futures are expected to start steady to 1 cent higher Monday, following the tone set in overnight activity, but looking for direction in the absence of fresh fundamental news, floor sources said.
In overnight activity, CBOT May wheat rose 1 1/4 cents to $3.43 3/4 per bushel, and July also rose 1 1/4 cents to $3.55 3/4.
Overnight at the KCBT, May gained 1/2 cent to $4.02 while July slipped 1/4 cent to $4.05.
There isn't much news to trade off of this morning, a commission house analyst said. The weather in the western US Central Plains is still a little dry, but Egypt bought French wheat over the weekend and that is not positive, he added.
Egypt's General Authority for Supply Commodities GASC said Saturday it bought 120,000 metric tonnes of French wheat for shipment April 21-30, said GASC General Manager Nomani Nomani. Egypt bought 60,000 tonnes from Dreyfus at $135.95 per tonne and 60,000 tonnes from Cargill at the same price, he said.
In the U.S. Central Plains there is a chance for a few showers in the far southern locations Monday with a few light showers developing Wednesday, DTN Meteorlogix Weather said. There is a chance for showers and possible thundershowers Thursday, before drier conditions return Friday. Rainfall should average .30-1.50 inches in the northern and eastern areas and .10-.50 inch in the southwest, DTN Meteorlogix said. Temperatures should average near to above normal on Thursday and Friday.
In the eastern U.S. Midwest soft red wheat growing region, light precipitation is forecast Monday and Tuesday with accumulation of .10-.50 inch. Moisture returns Thursday and Friday in the form of showers and possible thundershowers with .25-1.00 inch and locally heavier, DTN Meteorlogix weather said.
On technical charts, the next major downside objective is the January low of $3.32 1/2 for CBOT May wheat, a market technician said. He pegs first resistance in CBOT May at $3.45, Friday's high and then at $3.50. First support is seen at $3.40 and then at $3.35.
For May KCBT, the bear's next major objective is closing prices below major psychological support below $4.00, the analyst said. First resistance is seen at $4.08, Thursday's high and then at $4.12. First support is seen at $4.00, and then at $3.95.
Large non-commercial traders are net long a combined 2,101 CBOT wheat futures and options as of March 21, the Commodity Futures Trading Commission reported Friday.
Large non-commercial traders are net long 37,809 KCBT wheat futures and options on futures as of March 21, the CFTC reported.
At the MGE, large non-commercial traders are net long 10,903 wheat futures and options on futures contracts as of Mar. 21, the CFTC reported Friday.
Cash wheat basis bids were mixed Monday morning. Soft red wheat basis bids were mixed with Cincinnati 3 cents higher at 15 cents under the May future.
Hard red wheat basis bids were unchanged to slightly lower with Hutchinson, Kan. unchanged at 11 cents under the May.
Hard spring wheat basis bids were also mixed with Minot, N.D. two cents higher at 35 cents under the May future.
In other wheat news, China's wheat imports fell 99.4% in February to 2,303 metric tonnes and 96.1% in the January-February period from a year-ago, the country's General Administration of Customs said Monday.
India's wheat stocks stood at 3.6 million metric tonnes as of Mar. 1 an Indian government official said. That is below the country's minimum buffer rule and enough to meet 2.5 months of demand the official said.
Wheat prices in China fell slightly in the week ended Monday on over supply, analysts said. Supplies have risen as farmers have sold stocks to raise money for spring planting and warehouses have released stocks as well, said Chen Kang, an analyst with National Grain and Oils Information Center.
This morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 10:00 a.m. CST.
