Wheat Outlook: Up 2-4c On Hot, Dry US HRW Weather, Oil CHICAGO (Dow Jones)--U.S. wheat futures were called to open up 2-4 cents Wednesday on forecasts for hotter temperatures in the U.S. Plains hard red winter wheat belt beginning Thursday and gains in outside inflationary markets including crude oil and precious metals, brokers said.
"The outlook calls for dry weather through Friday and mostly dry weather with a few light showers possible Saturday through Monday," said Mike Palmerino, of DTN Weather of the forecasts for the U.S. Plains hard red winter wheat belt.
"Temperatures should be in the mid-80s to mid-90s (Fahrenheit) from Thursday to Tuesday," he added. "The crop is still pretty much heading to filling north of Oklahoma into Nebraska, a vulnerable situation in terms of moisture needs.
"You could still be taking this crop (production) down even more, with the prospects for hot, dry weather over the next week to 10 days," Palmerino said. "It could be a small crop that may be getting even smaller."
The U.S. Department of Agriculture last Friday forecast 2006-07 U.S. hard red winter wheat production at 715 million bushels, well below the estimated 2005-06 crop of 930 million bushels.
Meanwhile, crude oil futures at the New York Mercantile Exchange and metals futures on the Comex division of the Nymex were stronger in early trade Wednesday, a supportive factor for U.S. wheat futures, brokers said.
In the overnight e-CBOT session, most-active July wheat closed up 4 1/4 cents at $4.07 3/4 per bushel.
"Bulls still have solid technical power," a technical source said. "The next upside price objective for the bulls is closing prices above solid resistance at the contract high of $4.11 a bushel. It would take a close below solid support at $3.82 to provide the bears with fresh downside technical momentum."
First resistance for CBOT July wheat was seen at $4.04--Tuesday's high--and then at $4.11. First support was put at $3.96 3/4--Tuesday's low--and then at $3.92 1/2.
Kansas City Board of Trade July wheat ended overnight up 7 1/4 cents at $4.93 per bushel.
"Bulls still have the solid technical advantage," a technical source said. "Look for higher volatility in the near term. The next major upside price objective for the bulls is major psychological resistance at $5.00 a bushel. A close below the support at $4.50 would provide the bears with fresh downside technical momentum."
First resistance for KCBT July wheat was seen at $4.87--the contract high--and then at $4.90. First support was seen at $4.76--Tuesday's low--and then at $4.73--this week's low.
Cash U.S. hard red winter wheat basis bids were steady to weak Wednesday; soft red winter wheat basis bids were also steady to weak, with an 11-cent loss in Cincinnati; and spring wheat basis bids were steady, grain merchandisers said.
In export news, traders continued to keep an eye on news from Iraq after a news wire reported Tuesday that Iraq had tendered for 1.5 million tons of wheat in a tender that closed May 9.
European traders reportedly expected Australia to garner at least a part of the tender, and noted that Iraq had been interested this week in Australian prices for May shipment.
U.S. wheat traders said Tuesday the U.S. might win some of the business, but that Iraq was key in the export rationing process that will have to take place in 2006-07 due to the short U.S. hard wheat supplies.
In other global news, India's State Trading Corp. has made more changes in its tender to import 3 million metric tons of wheat, including the specifications for testing quality and fumigation of cargoes, a company official said Wednesday.
This is the fourth set of modifications in the tender since it was issued May 8. In terms of the volume sought, it is the largest ever tender floated by India for importing wheat.
-By Susan Schwendener; Dow Jones Newswires; 312-341-5780; [email protected]
