February 9, 2006

 

US Wheat Outlook on Thursday: Flat to down 1 cent after USDA report

 

 

Wheat futures at the Chicago Board of Trade are expected to start trading flat to 1 cent lower following Thursday morning's U.S. Department of Agriculture's supply and demand reports, and news that Egypt had bypassed buying U.S. wheat in its latest tender, sources said.

 

In overnight e-CBOT trading, March wheat rose 1 3/4 cents to $3.58 1/2 per bushel, May wheat gained 1 1/4 cents to $3.70, and July rose 1 1/2 cents to $3.79 1/2.

 

Overnight at the KCBT, March wheat gained 2 3/4 cents to $4.29 1/2 per bushel.

 

The USDA left all wheat ending stocks unchanged at 542 million bushels, slightly above the average analyst estimate of 536 million bushels. World wheat ending stocks were reduced over 2 million metric tonnes to 142.0 million from the January report.

 

The ending stocks number was a tad negative, said Brian Hoops, president of Midwest Marketing in Yankton, S.D.

 

Wheat could trade lower Thursday on news that Egypt purchased non-US wheat overnight and that Iraq has delayed any decision on its recent tender until Sunday, said Hoops.

 

However, any price weakness should be met with decent buying support as the market should go back to trading inflationary factors, with outside markets like gold and silver and what the funds want to do, he added.

 

Egypt's General Authority for Supply Commodities, or GASC said it bought 240,000 metric tonnes of Australian and French wheat overnight. It purchased 180,000 tonnes of Australian standard wheat from the Australian Wheat board at $131 per tonne and 60,000 tonnes of French wheat at $134.89 per tonne.

 

Weekly export sales totaled 358.2 thousand metric tonnes for the 2005-06 season and 71.0 thousand metric tonnes in 2006-07, the USDA reported Thursday morning. This total was slightly above analysts estimates of 200,000-400,000 metric tonnes.

 

On technical charts, the next upside objective for CBOT March remains the September 2005 high of $3.65, however a close below $3.45 providing the bears with fresh downside technical momentum, a technical analyst said. First resistance is pegged at $3.61 1/2, this week's high and then at $3.65, First support is seen at $3.50, and then at $3.47 1/2.

 

For March KCBT, bulls are looking for more on the upside in the near term after scoring another fresh contract high Wednesday, the analyst said. The next major longer-term price objective is $4.31, the 2004 high. First resistance is seen at Wednesday's high of $4.28 and then at $4.31. First support is pegged at $4.20 and then at $4.16.

 

Cash wheat basis bids were unchanged to lower Thursday morning. Soft red wheat basis bids were unchanged to lower with Evansville, Ind., 7 cents lower at 5 cents under CBOT March.

 

Hard red winter wheat basis bids were mostly unchanged with Manhattan, Kansas, 2 cents lower at 15 cents under KCBT March wheat.

 

Spring wheat basis bids were mostly unchanged with Minot, N.D., unchanged at 24 cents under MGE March futures.

 

In global wheat news, Japan's Ministry of Agriculture, Forestry and Fisheries bought 96,000 metric tonnes of milling wheat in a tender concluded Thursday, an MAFF official said. MAFF bought 51,000 tonnes of U.S. wheat and 45,000 tonnes of Canadian wheat.

 

The Taiwan Flour Millers Association bought a total of 72,800 metric tonnes of U.S. No. 1 wheat from trading houses Mitsui and Toepher in a tender concluded Thursday, a TFMA official said. Mitsui sold 33,500 metric tonnes and Toepher sold 39,300 metric tonnes.

 

Iraq is likely not to buy wheat from Australia's wheat monopoly until the end of an investigation over possible corruption and kickbacks involving the U.N.'s oil-for-food program, a senior Iraqi Trade Ministry official said Thursday. Recently Iraq has tendered for up to 1 million metric tonnes of optional origin wheat but has postponed a decision to buy the wheat until Sunday due to Shiite Muslim holidays.