February 2, 2006

 

US Wheat Outlook on Thursday: Down 1/2-1 cent on consolidation, SRW exports

 

 

U.S. wheat futures were called to open 1/2 cent to 1 cent lower on Thursday on follow-through selling amid a slight technical correction and as weekly U.S. soft red winter wheat export sales were reported at a disappointing negative 27,000 tonnes, brokers said.

 

"We've got a market that's on the toppy side and has a little bit of downside momentum and is not going to get a lot of support from the other markets here," said Shawn McCambridge, a grain analyst at Prudential Financial. "So in general, I think we're going to continue to slide just a little bit and see what kind of degree of selling that we start to see come in."

 

Losses could be limited by news that India may import about 500,000 tonnes of wheat soon amid very low stocks and rising domestic prices.

 

The news follows months of speculation that India would need to import wheat. The government's wheat stocks plummeted to around 6.3 million tonnes as of Jan. 1, from 8.9 million tonnes on the same day last year, but government officials had been denying the need for imports.

 

Moreover, U.S. wheat traders await the opening of Iraq's bids for 1 million tonnes of optional origin hard wheat, Prudential's McCambridge noted.

 

"So there is a little bit of business out there - although Jordan canceled its tender," he said. "With the market coming down here, they'll (Jordan) probably be back in."

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1/2 cent at $3.38 3/4 per bushel.

 

First resistance for CBOT March was seen at $3.41 1/2 - Wednesday's high - and then at $3.45, a technical trader said. First support lies at $3.37 1/2 - Wednesday's low - and then at $3.35.

 

Weekly U.S. wheat export sales for the week ended Jan. 26 totaled 358,200 tonnes for the 2005-06 marketing year and 351,600 tonnes for the 2006-07 marketing year, the U.S. Department of Agriculture reported Thursday.

 

Weekly export sales of U.S. soft red winter wheat totaled a negative 27,100 tonnes, while export sales of U.S. hard red winter wheat lead, at 144,600 tonnes, lead the tally, the USDA said.

 

In overnight wheat export news, Japan bought 60,000 tonnes of U.S. wheat in an overall purchase of 80,000 tonnes.

 

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

 

In other global wheat news, Russia's grain exports during the first seven months of the 2005-2006 marketing year (July-January) increased 69% on the year to 9.3 million tonnes, including flour in grain value, Prime-Tass News Agency reported Thursday, citing an analyst with Russia's Institute of Agricultural Market Studies.