February 8, 2008

 

US Wheat Outlook on Friday: Limit up on overnight follow-through

 

 

U.S. wheat futures are called Friday to climb the daily, exchange-imposed limits of 30 cents at the opening after surging limit up overnight, traders said.

 

The Minneapolis Grain Exchange will maintain its position as leader of the wheat markets, they said.

 

In overnight electronic trading, Chicago Board of Trade March wheat rose 30 cents to US$10.93 per bushel. Kansas City Board of Trade March wheat jumped 30 cents to US$11.40 1/4, and MGE March wheat closed up 30 cents at US$15.53.

 

The MGE has been leading CBOT and KCBT wheat higher recently amid strong demand for spring wheat and short supplies. That trend should continue, with no clear indications that high prices are shutting off demand, an analyst said.

 

MGE March wheat's move to US$15.53 represents the highest price ever for a wheat contract traded on a U.S. exchange. All three exchanges are trading at record highs, with CBOT May wheat hitting US$11.09 3/4 overnight and KCBT May wheat hitting US$11.50 1/4.

 

"All wheat markets should continue to watch the Minneapolis wheat futures market," a technical analyst said.

 

The U.S. Department of Agriculture in its monthly supply and demand report, released Friday, lowered its forecast for 2007-08 wheat ending stocks and raised its projection for exports. The adjustments were expected, traders said.

 

The USDA pegged wheat carryout at 272 million bushels, down from 292 million last month and below the average of analysts' pre-report estimates of 274 million. The USDA in the report increased its export forecast by 25 million bushels.

 

Weather conditions during the next few days do not appear threatening to the dormant U.S. winter wheat crop, forecasters said. In the eastern Midwest and Delta, temperatures will be colder Sunday and Monday but not cold enough to harm wheat, DTN Meteorlogix said.

 

CBOT wheat bulls' next upside price objective is to push and close the March contract above psychological resistance at US$11.00, the analyst said. The next downside price objective for the bears is pushing and closing prices below major psychological support at US$10.00, he said. First resistance is seen at US$10.93 and then at US$11.00. First support lies at Thursday's low of US$10.37 and then at US$10.09.

 

At the KCBT, bulls' next upside price objective is pushing and closing March wheat above resistance at US$11.50, the technical analyst said. The bears' next downside objective is pushing prices below solid support at US$10.80 1/4. First resistance is seen at US$11.40 1/4 and then at US$11.50. First support is seen at US$11.00 and then at US$10.80 1/4.

 

In other news, Ukraine for an indefinite period of time has postponed approving a draft decree increasing the grain export quota, the government press service said. The increase, for the remainder of the current marketing year, was to be by 1.7 million metric tonnes to 2.9 million tonnes.

 

The president of the Ukraine Grain Association said the country may resume its grain export Feb. 15. A government committee will discuss the increase in the grain export quota Feb. 7, and the draft decision would be presented to the cabinet for final approval Feb. 13, he said.

 

India's federal government, meanwhile, might need to import around 3.0 million metric tonnes of wheat in the marketing year that starts in April because of likely fall in production, a senior industry analyst said Friday. India's wheat output could fall by 1.0-2.0 million tonnes next year because of delayed sowing and inadequate availability of soil nutrients, said Mark Samson, vice president of U.S. Wheat Associates for South and South-East Asia.

 

India is discussing the purchase of at least 300,000 metric tonnes of wheat from Kazakhstan to boost its buffer stocks, a senior government official said Friday. The wheat buys would be on a government-to-government basis.

 

In Canada, all wheat acres seeded in 2008-09 are expected to be 24.216 million acres, up from the 21.866 million seeded in spring 2007, according to an outlook from the market analysis division of Agriculture and Agri-Food Canada. Small increases in canola and barley area were also forecast as were drops in oats and summer fallow acres.