January 18, 2006

 

US Wheat Outlook on Wednesday: Down 1-2 cent on continued technical sales

  

 

U.S. wheat futures were called to open down 1 cent to 2 cents per bushel Wednesday on follow-through technical sales after Tuesday's bearish close, brokers said.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1 1/4 cents at US$3.27 1/2.

 

First resistance for CBOT March was seen at US$3.30 and then at US$3.35 1/2, a technical trader said. First support was seen at US$3.26--Tuesday's low--and then at US$3.23 3/4--this month's low.

 

Traders continued to eye crop stress due to drought in the U.S. Southern Plains and tight old-crop hard red winter wheat stocks, but sources at the Kansas City Board of Trade said local traders might try to trigger speculative fund sell stops amid a hefty net fund long stance in KCBT HRW wheat futures.

 

Cash U.S. hard red winter wheat basis bids were steady to weak Wednesday, with a 5-cent loss at the Texas Gulf; soft red winter wheat basis bids were mostly steady; and spring wheat basis bids were steady to weak with a 3-cent loss in Billings, Mont., grain merchandisers said.

 

In U.S. wheat export news, South Korea bought 20,000 tonnes of U.S. wheat, sources said.

 

In global wheat news, a U.S. Department of Agriculture attache report forecast a 19% drop in autumn 2005 Ukraine winter wheat plantings due to dry weather.

 

"Approximately 1.4 million more hectares of land will be available for spring crops in 2006 as compared with 2005," the attach¡¡ì¦ said. "Most likely, farmers will increase plantings of spring barley, sunflower seed, soybeans, corn and spring wheat in 2006. However, doubts exist if they will be able to fully compensate for the reduction in winter wheat plantings."

 

Traders also noted a USDA attach¡¡ì¦ report stating delayed testing on a shipment of Canadian wheat by Italian authorities has led to the arrest of an Italian importer, and to concerns in the industry about unfair scrutiny of wheat imports.

 

"U.S. wheat has not been directly affected to date," the attache report said.