January 20, 2006

 

US Wheat Outlook on Friday: Up 1-2 cents on technicals, US HRW crop

  

 

U.S. wheat futures were called to open up 1 cent to 2 cents per bushel Friday after firm overnight trade on follow-through technical buying and concerns about tight U.S. hard wheat supplies and poor HRW crop conditions, brokers said.

 

Kansas City Board of Trade hard red winter wheat futures were again expected to led gains amid worries about the drought-stricken U.S. HRW crop, brokers said. Forecasts called for much-needed precipitation early next week.

 

Friday's wheat gains could be limited amid a lack of confirmation of fresh U.S. wheat sales to Iraq, brokers said. Some traders credited part of Thursday's KCBT rally to rumors of a new sale of U.S. wheat to Iraq.

 

The U.S. Department of Agriculture reported early Friday that weekly U.S. wheat exports (old- and new-crop combined) totaled 435,800 tonnes, matching traders' estimates, with no sales listed to Iraq.

 

Moreover, there was no confirmation in the government's daily report of the sale to Iraq of 100,000 to 150,000 tonnes of U.S. wheat that was rumored in futures markets Thursday, brokers noted.

 

In overnight U.S. wheat export news, South Korea bought 20,800 tonnes of U.S. wheat.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 2 cents at US$3.28 1/2 per bushel.

 

Cash Kansas City 12% hard red winter wheat basis bids were steady late Thursday; soft red winter wheat basis bids were steady to weak early Friday; and spring wheat basis bids were steady to up 2 cents in Portland, Ore., grain merchandisers said.

 

In global wheat news, traders continued to eye reports of severe cold in Russia's wheat-growing region.

 

Australian Prime Minister John Howard appeared to back away from support of monopoly exporter Australia AWB Ltd. as a government-appointed Royal Commission started hearings on whether AWB breached Australian law by paying kickbacks to Saddam's regime, sources said.

 

AWB's monopoly involves exporting wheat worth more than AUS$4.6 billion (USUS$3.5 billion) a year.

 

In addition, the company exports and trades in other grains, offers a comprehensive range of financial products to farmers, and is one of Australia's biggest suppliers of rural merchandise and services.

 

The existence of the export monopoly was already scheduled to be reconsidered under a scheduled national competition policy review in 2010, but the news hit company shares this week.

 

AWB closed the week at AUS$5.21, down 18% from its high of AUS$6.33 on Monday, on heavy turnover of 4.7 million shares.