November 22, 2005

  

US Wheat Outlook on Tuesday: Up 1-2 cents on e-CBOT, technicals, crop rating

  

 

U.S. wheat futures were called to open up 1-2 cents per bushel Tuesday following firm overnight trade, on a technical bounce amid oversold signs following recent losses and on the slow deterioration of hard red winter wheat crop conditions in key Southern Plains states, brokers said.

 

In the overnight e-CBOT session, March wheat at the Chicago Board of Trade closed up 2 1/4 cents at US$3.15 1/2 following Monday's fresh contract low of US$3.13. CBOT December ended overnight up 1 cent at US$2.99 1/2 per bushel after setting a contract low Monday of US$2.98.

 

The two nearby CBOT wheat contracts remained technically oversold, with the 9-day relative strength index at 27 in the March and 23 in the December, both below the benchmark oversold level of 30.

 

First resistance for CBOT March was put at US$3.18 and then at US$3.20, while first support was seen at US$3.13 - the contract low - and then at US$3.10, a technical analyst said Tuesday.

 

Some wheat traders also noted support from the U.S. Department of Agriculture's report late Monday that 55% of the U.S. winter wheat crop was in good-to-excellent condition as of Sunday.

 

The rating was down 1 percentage point from last week's rating amid dry U.S. Southern Plains weather. Only 65% of the Kansas winter wheat crop was in good to excellent shape as of Sunday, below last week's 68%.

 

In Oklahoma, 46% of the crop was in good-to-excellent condition, behind last week's rating of 50%; and in Texas, only 27% of the winter wheat crop was in good-to-excellent shape, behind last week's rating of 28%.

 

Moreover, forecasts called for mostly dry conditions through Saturday across the Southern Plains HRW wheat-growing region, with above to much-above temperatures during the latter period.

 

Still, some of the key U.S. soft red winter wheat growing areas showed a little improvement.

 

Eighty-two percent of the Indiana winter wheat crop was in good-to-excellent shape, up 3 percentage points from last week; and 43% of Arkansas' crop meeting that rating, up from last week's 33%.

 

The USDA said 91% of the U.S. winter wheat crop was emerged, up 1 percentage point from last year and 2 percentage points above the long-term average.

 

And while U.S. crop condition ratings were noted in early winter, some analysts said that U.S. spring weather conditions would have a greater impact on the crop's development.

 

Cash U.S. hard red winter wheat basis bids were steady to weak Tuesday; soft red winter wheat basis bids were steady to firm; and spring wheat basis bids were steady to mixed, with a 10-cent gain in the Minneapolis rail bid, grain merchandisers said.

 

U.S. wheat export sales were quiet. In global wheat news, Iraq's trade minister reiterated that wheat imports from Australia would continue.