February 1, 2007

 

US Wheat Outlook on Thursday: Up 1-2 cents, following e-CBOT, short covering

 

 

U.S. wheat futures are forecast to begin Thursday's day session 1 to 2 cents higher as light follow through buying from the overnight session and short covering after recent oversold conditions are expected to underpin prices at the opening, sources said.

 

In overnight electronic trading, CBOT March wheat gained 1 1/4 cents to US$4.68 3/4, while March KCBT hard red wheat rose 3/4 cent to US$4.89 1/2.

 

Wheat should find support from the steady tone in the overnight session, a floor trader said. In addition, wheat could draw some support from position squaring as it remains oversold, he added.

 

It is the first of the month and the market will be waiting to see in new money is allocated to commodities, an analyst said. In addition, corn and soybeans were firm in overnight trade so wheat will be looking to the other grains for direction, he noted.

 

Extremely cold weather forecast for the U.S. over the next several days and into early next week will also limit strong selling interest, as concerns over the potential for winterkill will likely limit aggressive selling, the analyst added.

 

The U.S. Department of Agriculture reported weekly wheat export sales totaled 560,500 metric tonnes for the week ended Jan. 25, within the 350,000-650,000 expected by analysts. Nigeria, Japan and Egypt were the largest buyers on the week. A CBOT wheat trader termed sales "solid."

 

On daily technical charts, CBOT March wheat closed near the session high on short covering but is still in a 3 1/2 month downtrend on the daily bar chart, a technical analyst said.

 

First resistance is seen at Wednesday's high of US$4.70 and then at US$4.75. First support is seen at Wednesday's low of US$4.60 and then at this week's low of US$4.53 1/2.

 

March KCBT wheat also closed near the session high Wednesday on position squaring, the analyst said.

 

He sees first resistance for KCBT March is seen at US$4.91, Wednesday's high and then at US$4.95. First support is seen at US$4.85 and then at US$4.82.

 

In the U.S. Midwest, soft red wheat growing area there is a chance for snow showers Thursday, Friday and into Saturday, DTN Meteorologix Weather said. Temperatures are expected below normal Thursday and well below normal Friday and Saturday across most of the region.

 

In the U.S. hard red winter wheat belt, there is a chance for light precipitation Friday in the southern sections, with drier weather forecast for Saturday, Meteorologix Weather said. Temperatures are predicted to average below normal.

 

In other wheat news, Taiwan Flour Millers Association bought 80,150 metric tonnes of U.S. No. 1 wheat from Columbia Grain in a tender concluded Wednesday, an association official said.

 

China auctioned 391,830 metric tonnes of wheat Thursday, 55% of the 711,000 metric tonnes it expected to sell. The sale is the latest in a series of auctions designed to stabilize wheat prices. The wheat was purchased by state warehouses last year to protect farmers' income.