January 25, 2007

 

US Wheat Outlook on Thursday: Up 3-4 cents; turnaround from Wednesday seen

 

 

U.S. wheat futures are forecast to start Thursday's day session trading 3-to-4 cents higher following firm prices in overnight trading and ideas Wednesday's losses were overdone and due for a correction, sources said.

 

In overnight electronic trading, CBOT March wheat rose 4 1/4 cents to US$4.70 1/4, while March KCBT hard red wheat gained 5 1/4 cents to US$4.92.

 

Wheat was overdone to the downside Wednesday and should see some support at the opening, with higher prices in overnight trading also providing support, a commercial connected analyst said.

 

However, export sales were lower than expected and could temper the gains, he added.

 

The U.S. Department of Agriculture reported that weekly wheat export sales totaled 246,100 metric tonnes, 70% below the previous week and below the 300,000-600,000 tonnes forecast by analysts. Japan, Mexico and Yemen were the primary buyers on the week, according to the USDA.

 

Wheat exports were lousy, a floor trader said. However, wheat continues to be a follower of the other grains and it could see some consolidation Thursday, he added.

 

On daily technical charts, CBOT March wheat remains in a down trend on the daily bar chart with the next downside objective closing prices below US$4.47 1/2 a bushel, a technical analyst said. The next upside objective remains closing prices above resistance at US$4.86 1/2 per bushel, the analyst said.

 

First resistance is seen at US$4.70 and then at US$4.74. First support is seen at Wednesday's low of US$4.63 1/2 and then at US$4.60.

 

March KCBT wheat closed near the session low Wednesday. The bulls' next upside objective is closing prices above this month's high of US$5.11 per bushel, while the bears look to close prices below this month's low of US$4.67.

 

First resistance for KCBT March is seen at US$4.90 and then at US$5.11. First support is pegged at US$4.85 and then at US$4.80.

 

Mainly dry conditions are expected through Friday in the U.S. hard red winter wheat belt with a chance for some light precipitation in southern and eastern areas Friday night into Saturday, DTN Meteorologix Weather said. Temperatures are expected to average above normal Friday and near-to-below normal Saturday and Sunday.

 

In the U.S. soft red winter wheat belt, there is a chance for light snow or flurries Friday and into Saturday especially near the Great Lakes, Meteorologix Weather said. Temperatures are expected to average near-to-above normal on Friday west and below-normal east and near-to-above normal Saturday across the region.

 

In other wheat news, Japan's Ministry of Agriculture is purchased 160,000 metric tonnes of wheat Thursday, a ministry of agriculture official said Wednesday. The U.S. portion of the sale totaled 70,000 metric tonnes.

 

China auctioned 412,100 metric tonnes of wheat in six provinces, 51% of the total it planned to sell, sources said.

 

The sale is the latest in a series designed to stabilize prices. Last week, China sold 392,900 metric tonnes. The wheat was purchased last year by the government under the minimum purchase price.

 

China's 2006 wheat imports fell 83.3% to 584,095 metric tonnes, the government reported Thursday. Australia was the largest supplier at 304,000 tonnes.