January 5, 2007

 

US Wheat Outlook on Friday: Steady to lower on weak export sales

 

 

U.S. wheat futures are expected to start Friday's day session steady to lower with pressure from weak export sales, sources said.

 

Benchmark Chicago Board of Trade March wheat is called to open flat to 2 cents lower per bushel.

 

In e-cbot electronic trading, CBOT March wheat was 1 1/2 cents higher at US$4.69.

 

The U.S. Department of Agriculture reported weekly U.S. wheat export sales for the week ended Dec. 28 were 135,100 metric tonnes, a marketing-year low that was below trade expectations. Analysts surveyed by Dow Jones Newswires had predicted sales would fall between 200,000 tonnes and 400,000 tonnes.

 

The weekly sales were 62% below the previous week and 68% under the prior four-week average, according to the USDA. The biggest buyers were Thailand, which took 55,500 tonnes; Indonesia, which bought 55,100 tonnes; and Taiwan, which bought 51,700 tonnes.

 

"It's not good," Vic Lespinasse, a CBOT floor analyst with AG Edwards & Sons, said about the sales.

 

Wheat also is technically weak after suffering heavy losses earlier this week, sources added.

 

CBOT March wheat prices on Thursday again hit a fresh three-month low amidst continued fund long liquidation, a stronger U.S. dollar and pressure from beneficial moisture in the Plains pressured prices again today.

 

CBOT March wheat is in a 2 1/2 month-old downtrend on the daily bar chart, a technical analyst noted.

 

The next downside price objective for the bears is closing prices below solid support at US$4.50. The bulls' next upside price objective is to close prices above solid resistance at US$4.94 1/2, the analyst said.

 

First resistance is seen at US$4.70 and then at US$4.75. First support lies at Thursday's low of US$4.65 and then at US$4.60.

 

At the Kansas City Board of Trade, March wheat prices Thursday scored a big and bearish "outside day" down on the daily bar chart, the analyst noted. Bears have solid downside technical momentum, the technical analyst said.

 

The bears' next downside objective is closing KCBT March wheat prices below solid support at the August low of US$4.62. The bulls' next upside price objective is closing prices above psychological resistance at US$5.00.

 

First resistance is seen at US$4.80 and then at US$4.85. First support is seen at Thursday's low of US$4.76 and then at US$4.70.

 

Further pressure could come from new long-range forecasts that suggest a new major winter storm is possible in the U.S. Southern Plains within the next six to 10 days, sources said.

 

In western areas of the Plains, the storm could bring snow or rain changing to snow, while the east could see more rain, the DTN Meteorlogix weather firm reported.

 

In the eastern Midwest, moderate to heavy rain fell on most of the soft red winter wheat belt Thursday, the firm noted. Soil moisture remains at adequate-to-surplus levels, Meteorlogix added.

 

In India, meanwhile, wheat plantings as of Jan. 5 were estimated at 27.5 million hectares, up from 25.8 million hectares in the year-earlier period, according to the latest government data. The plantings of wheat are already one of India's largest ever for any year and have surpassed last year's total of 26.6 million hectares.

 

In other news, China sold 527,800 metric tonnes of wheat in five provinces through public auctions Friday, the National Grain & Oil Trade Center said. The auctions were part of the country's regular sales of wheat bought by the state warehouses under the minimum purchase price last year.

 

Two South Korean flour mills bought 21,500 metric tonnes of U.S. No. 1 wheat in a tender concluded Friday for delivery Feb. 5-March 6, a trader in Seoul said.

 

Total wheat stocks held in storage facilities operated by Australia's major bulk grain handling companies rose 34% on month in November to 10.2 million tonnes, the government's Bureau of Statistics reported. Grain stocks usually rise in November as the harvest gathers pace.