September 8, 2006

 

US Wheat Outlook on Friday: Mixed to weaker after in-line data

 

 

Another choppy mixed to weaker trade is expected for U.S. wheat futures Friday after the government released export sales data in line with trade expectations.

 

Benchmark Chicago Board of Trade December wheat is called to open mixed with a weaker tone.

 

In e-cbot overnight trade, December wheat was 1/4 cent higher at US$4.20.

 

For the week ending Aug. 31, the U.S. Department of Agriculture said wheat sales totaled 383,400 metric tonnes, at the low end of trade estimates for 300,000 to 500,000 tonnes. This figure is 12% below the previous week and 5% under the prior 4-week average. The top buyer was Yemen at 103,000 tonnes.

 

Without a strong export sales figure, wheat could test the downside, especially if traders square positions over the weekend. There are concerns after the recent rally the wheat markets could be choking of demand at higher levels.

 

"We did export sales decline after last week's rally and that's something we have to address - that we might be dampening demand," said John Kleist of Top Third Ag Markteing.

 

In other export news, Japan's Ministry of Agriculture, Forestry and Fisheries bought 70,000 metric tonnes of wheat in a tender concluded Friday, for arrival between Nov. 1-30. The U.S. garnered 50,000 tonnes of the purchase and Canada the rest. India is considering a combined purchase of 1.67 million metric tonnes of wheat from four international firms at US$223-US$238 a metric tonne, cost and freight, a senior government official said Friday.

 

"India's still only contemplating," Kleist said.

 

DTN Meteorologix noted the Southern Plains are entering a rainy period. There are chances of scattered showers and thunderstorms during Friday and Saturday, with showers lingering in the east and south during Sunday.

 

Rainfall should average 0.30-1.50 inches and locally heavier through southern Nebraska and across most of Kansas, 0.25-1.00 inch, through eastern Colorado, the Texas Panhandle and northern Oklahoma, 0.10-0.50 inch elsewhere in Oklahoma and north Texas. In the six-to-10 day outlook, temperatures average near normal and rainfall is seen near to above normal.

 

In Australia, a trace to 0.50 inch of rain is forecast through West Australia during the next few days and in northern New South Wales to southeast Queensland during the weekend into Monday. After Monday the rest of next week looks dry again. The forecast for Argentina shows little, if any, significant rainfall during the five to seven day period.

 

Cash wheat prices in Argentina were down Thursday as light rains relieved drought stress in the new-crop and demand from wheat exporters ebbed at higher prices, analysts said. While recent rains eased fears that new crop yields would fall sharply due to drought conditions in some areas, there are still concerns in some areas that insufficient rainfall will affect new crop wheat development.

 

In other news, genetically modifying wheat to boost yields, better withstand drought and produce other improvements would go a long way to help the crop and the industries built around it, but more work needs to be done to get consensus from all facets of the sector, U.S. farming and milling representatives said Thursday. No variety of biotech wheat has ever been commercialized on the U.S. market.

 

Wheat deliveries against the September CBOT contract totaled 20. FCStone issued all 12 contracts and stoppers were scattered.

 

At the Kansas City Board of Trade September deliveries totaled 18 contracts. The main issuer was Frontier issuing 10 contracts. Fimat stopped all contracts.

 

Delivery data for the Minneapolis Grain Exchange September contract were unavailable.