Asia Grain Outlook on Friday: Wheat likely to rebound from steep fall

 

 

Wheat prices will likely steady next week after having fallen 14% since the U.S. Department of Agriculture released a supply-demand report last week, although ample world supplies will weigh down prices further in the longer term.

 

"The bearish fundamentals indicated in the USDA report last Tuesday have largely been priced in; (CBOT) wheat is likely to be steady next week," said Okato Shoji commodities analyst Koname Gokon.

 

The benchmark March wheat futures traded on the Chicago Board of Trade were down 1.1% at US$4.94 a bushel at 0713 GMT Friday, or 3.2% lower from a week earlier.

 

Gokon added any possible rebound will depend on "good timing" and pegged resistance at US$5.1/bushel.

 

The USDA data released Jan. 12 sent U.S. wheat futures sharply lower as the government raised the U.S. and world stock estimates, while cutting its forecast for U.S. exports.

 

For 2009-10, the USDA projected global production to fall modestly, but would still be the second-highest level on record, while exports are expected to be the lowest in nearly four decades.

 

Barclays Capital said in a research report Thursday wheat would "be more comfortable around the mid-US$4/bushel level," as new supplies and ample stocks pressure prices and depress sentiment in the coming months.

 

Market participants also pointed to the recent U.S. dollar strength as adding to the grain's weakness, as a stronger currency could reduce the attractiveness of U.S. exports vis-a-vis other suppliers.

 

China's General Administration of Customs said Thursday the country's wheat imports in 2009 rose sharply to 893,710 metric tonnes from 31,873 tonnes in 2008. The U.S. was the top supplier, accounting for 44% of the total.

 

However, analysts in China doubted the imports could stay at such high levels, as the country only needs some high-quality types it doesn't grow, while domestic supply and ample inventories could meet demand.