April 24, 2009

 

US Wheat Outlook on Friday: Mixed on slow seeding, big Canada acres

 

 

U.S. wheat futures are poised to start mixed Friday as supportive delays in U.S. spring wheat plantings battle with expectations for improved winter wheat conditions and an estimate for expanded Canadian plantings.

 

Chicago Board of Trade July wheat in overnight electronic trading was unchanged at US$5.40 3/4.

 

Minneapolis Grain Exchange hard red spring wheat futures should continue to get some support from cool, wet weather that's expected to keep farmers out of their fields, said Brian Hoops, president of Midwest Market Solution. Strength at MGE could spill over into the Kansas City Board of Trade and CBOT, a trader said.

 

"Showers are moving into the Dakotas once again, which will further slow planting progress," Hoops said. "Chicago, Kansas City will probably get some short covering, following the lead of Minneapolis."

 

The CBOT trades soft red winter wheat, used to make pastries and snack foods, while the KCBT traders hard red winter wheat, used to make bread. HRS wheat also is used to make bread.

 

Wet weather has helped the winter wheat crop in Kansas recently, and condition ratings may improve on the upcoming crop progress report, Country Hedging said in a note. The report is due out at 4 p.m. EDT Monday.

 

"Widespread thunderstorm activity during the coming days will in most cases favor jointing to reproductive wheat" in the central and southern Plains, according to private weather firm DTN Meteorlogix. The moisture may not do much to help crops in Texas and Oklahoma, which are thought to have suffered damage from an early April freeze, the firm said in a forecast. Also, some fields may be damaged by strong rain storms accompanied by hail, high winds and possibly tornados, Meteorlogix said.

 

It's "negative" for wheat futures that Statistic's Canada estimated growers will increase wheat seedings for 2009-10, a CBOT trader said. All-wheat acres are seen at 25.161 million acres, above trade expectations and up from 25.009 million in 2008-09.

 

Farmers in the Canadian Prairies intend to plant 6.2% more spring wheat in 2009 than last year, largely due to a 430,000-acre increase in Saskatchewan, Statistics Canada said. Nationally, the agency says spring wheat plantings will reach 17.328 million.

 

The increase is somewhat surprising given that world wheat acres are expected to drop following a decline in prices, an analyst said. World wheat ending stocks remain plentiful, he said.

 

The next downside price objective for the bears is pushing and closing CBOT July wheat below solid technical support at US$5.10 3/4, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.84 1/2, he said.