September 19, 2006

 

US Wheat Outlook on Tuesday: Up 3-5 cents on slashed australian estimate

 

 

U.S. wheat futures are expected to open 3 cents to 5 cents a bushel higher Tuesday after officials slashed the Australian wheat estimate by 35% due to very dry weather, sources said.

 

Wheat futures were higher in overnight trade. Basis December contracts, Chicago Board of Trade wheat was up 4 3/4 cents at US$4.00 1/4, Kansas City Board of Trade wheat was 3 cents higher at US$4.69 and Minneapolis Grain Exchange wheat was up 3 cents at US$4.46 1/2.

 

While the industry had expected a significant reduction in the Australian crop, the new estimate exceeds the U.S. Department of Agriculture's latest forecast and is hard evidence that global stocks are dwindling, a trader said.

 

New-crop Australian wheat production is forecast at 16.4 million metric tonnes, down 35% from 25.1 million tonnes produced last year, the government's chief commodities forecaster, the Australian Bureau of Agricultural & Resource Economics, or Abare, said Tuesday.

 

The USDA on Sept. 12 estimated the Australian crop at 19.5 million tonnes.

 

Dry weather that is expected to persist this week will have a further detrimental effect on the crop, Australian industry sources said.

 

In the U.S., showers will continue to delay planting efforts but will favor recently planted wheat and continue to improve soil moisture levels, DTN Meteorlogix said. Mostly dry conditions are expected Tuesday and Wednesday, with chances for scattered showers and thundershowers seen later Wednesday or Thursday. Rainfall is expected to average 0.25-0.75 inch through eastern and central areas, while the west should only see a trace to 0.25 inch.

 

Additional scattered showers are expected Friday and Saturday, which also may favor eastern areas of the southern Plains, Meteorlogix said.

 

The USDA said Monday that 19% of the winter wheat crop was planted as of Sunday, versus 24% last year at this time and the 23% five-year average.

 

In Kansas, the largest HRW producer, 5% of the crop has been planted, up 2 percentage points from last year and equal to the five-year average.

 

Oklahoma farmers planted 19% of their wheat, up from 9% last year but down from the 26% five-year average. Six percent of the Texas wheat crop was planted, versus 6% last year and the 8% five-year average.

 

In other news, Russia has harvested 68.6 million tonnes of grain as of Monday, which includes 75.7% of the country's acreage.

 

India's wheat output is targeted at 75.53 million tonnes in 2007, versus 69.48 tonnes produced this year. This is above the 4.5 million-tonne increase the country's agriculture secretary announced Friday.

 

Rains have stalled the final stages of Saskatchewan's harvest, where about 91% of the crops have been picked. The spring wheat harvest was 93% complete as of Sunday, and 96% of the durum crop.