February 8, 2007

 

US Wheat Outlook on Thursday: Up 1-2 cents on position squaring before report

 

 

U.S. wheat futures are forecast to begin Thursday's day session trading 1 to 2 cents higher as position squaring ahead of Friday's U.S. Department of Agriculture reports and steady prices in overnight trading are expected to support prices, sources said.

 

In overnight electronic trading, CBOT March wheat gained 2 cents to US$4.54, while March KCBT hard red wheat rose 1 3/4 cents to US$4.78 1/4.

 

Wheat should draw some support from light position squaring ahead of Friday's USDA reports and export sales were "pretty solid," a commission house analyst said.

 

U.S. wheat ending stocks for the 2006-07 marketing year are seen at 474 million bushels, according to a survey of 12 analysts conducted by Dow Jones Newswires. This is nearly unchanged from the 472 million bushels the USDA estimated in January.

 

The USDA is scheduled to release its February supply-demand report Friday at 8:30 a.m. EST (1330 GMT).

 

U.S. weekly wheat export sales totaled 832,600 metric tonnes for the week ended Feb. 1, the USDA reported, above the 400,000-650,000 metric tonnes expected by analysts. Included in the total were sales of 110,000 metric tonnes for delivery in the 2007-08 marketing year.

 

There was some routine export business overnight, which should provide some support for wheat but spread trading was a major feature Wednesday and should be a feature again in Thursday's session, which could limit flat price action, a floor analyst said.

 

In export news, Jordan purchased 100,000 metric tonnes of optional-origin milling wheat; Morocco bought 25,000 metric tonnes of U.S. durum wheat. Tunisia bought 92,000 metric tonnes of optional-origin wheat. Iraq bought 100,000 metric tonnes of Syrian wheat, and in its weekly tender, Japan purchased 160,000 metric tonnes of wheat including 100,000 tonnes from the U.S.

 

On daily technical charts, CBOT March wheat is in a 4-month downturn on the daily bar charts and hit a fresh four-week low, a technical analyst said.

 

First resistance for CBOT March is seen at US$4.55 1/2 and then at US$4.60. First support is pegged at US$4.49 and then at last week's low of US$4.47 1/2.

 

March KCBT wheat is in a 3 1/2 month downtrend on the daily bar chart and the bears' next downside objective is closing prices below solid support at US$4.74 per bushel, the analyst said.

 

First resistance for KCBT March is at US$4.82, and then at US$4.85. First support is seen at US$4.74 and then at US$4.70.

 

In the U.S. Midwest soft red wheat growing area, mainly dry conditions are forecast Friday, with the chance for some light snow in western sections of the region Saturday. Mostly dry weather is forecast for Sunday, DTN Meteorologix Weather said. Temperatures are forecast to average below or much below normal.

 

In the U.S. hard red winter wheat belt, dry weather is forecast through Sunday, with precipitation possible Sunday night into Monday, with amounts of 0.10-0.50 inch, consisting of snow north and rain or snow east, DTN Meteorologix said. Temperatures are forecast to average below normal Friday and Saturday, and near- to below-normal Sunday.

 

In other wheat news, China sold more than 546,000 metric tonnes of wheat in its weekly auction Tuesday, 55% of the 991,000 tonnes it had planned to sell. The wheat was bought by state warehouses last year and the sale is part of a series of auctions designed to stabilize domestic prices.