January 26, 2006

 

US Wheat Outlook on Thursday: Down 1 cent on setback from recent spec buying

 

 

U.S. wheat futures were called to open down 1 cent Thursday following weak overnight trade on a setback from this week's speculative-led gains to new contract highs across the board in Kansas City Board of Trade and Minneapolis Grain Exchange wheat futures, brokers said.

 

Speculative-led fund buying Wednesday at the Chicago Board of Trade totaled about 12,000 wheat futures, they said.

 

Weekly U.S. wheat export sales, at 375,000 tonnes for old-crop 2005-06 wheat and 54,100 tonnes for new-crop, met traders' estimates.

 

"Overall, weekly wheat sales were routine," said Terry Reilly, a grain analyst at Citigroup. "Still, U.S. wheat losses could be limited by expected higher trade in Chicago Board of Trade corn futures on excellent export sales."

 

In the overnight e-CBOT session, most-active March wheat at the CBOT closed down 1 cent at $3.41. First resistance was seen at $3.45--Wednesday's high--and then at $3.47. First support was put at $3.40 and then at $3.35 1/2.

 

Cash U.S. hard red winter wheat basis bids were mixed Thursday; soft red winter wheat basis bids were mixed; and spring wheat basis bids were steady to weak, grain merchandisers said.

 

In overnight U.S. wheat export news, Japan bought 80,000 tonnes of U.S. wheat in an overall tender for 121,000 tonnes. In global trade, Morocco bought 400,000 tonnes of European Union wheat.

 

U.S. wheat traders continued to eye forecasts for light precipitation late this week in the dry U.S. Southern Plains; they also continued to watch longer-term forecasts which have called for a return to wintry temperatures.

 

In Russia, bitterly cold temperatures in Russia's Volga, Central and Southern Districts during the Jan 16-20 timeframe likely damaged some winter wheat crops, the USDA Foreign Agriculture Service said late Wednesday in a special report.

 

Minimum temperatures fell under negative 30 degrees Celsius for two to three straight days in some areas. In other parts of southern Russia temperatures ranged between negative 22 and negative 30 degrees.

 

In fact, crop losses in Ukraine and Russia are estimated to be large enough to impact the world balance sheet, the International Grains Council said Thursday.

 

World wheat production will total 595 million metric tonnes in 2006-07, down 20 million tonnes from the previous season and largely due to expected Russian and Ukrainian crop losses, the Council said.