January 6, 2006

US Wheat Outlook on Friday: Steady-up 1 cent on technical recovery

U.S. wheat futures were called to open steady to up 1 cent on Friday on a recovery from recent losses and following calls for a 3-5 cent gain in Chicago Board of Trade soybean futures, brokers said.

Smaller-than-expected weekly U.S. wheat export sales were discounted as traders noted the year-end holidays had disrupted normal trade.

The U.S. Department of Agriculture reported Friday weekly U.S. wheat exports sales, for old and new crop combined, totaled 239,100 metric tonnes, below estimates of 250,000 to 450,000 tonnes.

Wheat traders globally continued to question this week's reports from Baghdad of an Iraqi purchase of 1 million tonnes of U.S. hard wheat, particularly as there has been no official USDA confirmation of the deal and one newswire quoted sources denying the news.

U.S. and European-based wheat sources were unable to confirm or deny the transaction on the record as of the time of publication.

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1/4 cent at US$3.39 1/2.

First resistance is seen at US$3.43 1/2 - Thursday's high - and then at US$3.47 - last week's high, a technician said. First support lies at US$3.38 and then at US$3.34 1/2.

Cash U.S. hard red winter wheat basis bids were mostly steady to firm Friday, with a 4-cent gain in Wichita and a 2-cent gain in Port of Catoosa, Okla.; soft red winter wheat basis bids were also steady to firm, with a 10-cent gain in Chicago; and spring wheat basis bids were steady to weak, with a 5-cent loss in Minneapolis, Duluth, Grand Forks and Aberdeen, grain merchandisers said.

Traders continued to eye reports of poor crop conditions in the southern Great Plains due to lingering droughty weather. Forecasts called for more hot, dry weather through Tuesday.