January 2, 2008

 

US Wheat Outlook on Wednesday: 10-15 cents firmer on demand from Pakistan

 

 

U.S. wheat futures are called to start Wednesday's day session firmer in a bounce from recent weakness and with fresh demand from Pakistan emerging at the start of the new year.

 

Benchmark Chicago Board of Trade March wheat is called to open 10 to 15 cents per bushel higher. In e-cbot overnight trading, CBOT March wheat climbed 14 cents to US$8.99.

 

CBOT wheat pulled back from gains at the close Monday in a late sell-off, and the market is due for a bit of a rebound, a CBOT floor broker said. Strength in CBOT soybeans, corn and in outside markets, such as crude oil, should help wheat futures advance, traders said.

 

"We overdid it a little to the downside Monday," the broker said.

 

The wheat markets also have support from news that state-run Trading Corp. of Pakistan is seeking 610,000 metric tonnes of wheat in two separate tenders, bids for both of which will be accepted until Jan. 12. The wheat prices will be on a cost and freight basis, and the tenders didn't specify a delivery schedule.

 

Egypt's state-owned Food Industries Holding Co. is also in the market for wheat and has issued a tender for 46,000 tonnes, traders said. The tender is for wheat of any origin for immediate delivery, a trader said.

 

India's federal government, meanwhile, has lifted the import duty on wheat flour, a senior government official said. The move aims to facilitate easier imports of wheat flour into the country and is seen as bullish, a trader said.

 

India's wheat production in the crop marketing year that starts April is expected to top 75 million metric tonnes, up from 74.89 million a year-earlier, according to the government. However, some experts believe that dry weather during sowing and fall in areas under wheat could harm final output.

 

Weather in U.S. winter wheat areas doesn't look threatening for the crop, which is now dormant, traders said. A cold weather threat has ended in hard red winter wheat areas of the U.S. Plains, and conditions should become "very warm" by this weekend, according to DTN Meteorlogix.

 

Cold weather is sweeping through soft red wheat areas of the eastern Midwest. However, temperatures will probably not drop low enough to harm plants, Meteorlogix said.