February 9, 2007

 

US Wheat Outlook on Friday: 1-2 cents higher after USDA; corn spillover

 

 

U.S. wheat futures are expected to begin Friday's day session trading 1-to-2 cents higher, supported by an expected higher start in corn futures, sources said after a neutral February supply and demand report from the U.S. Department of Agriculture.

 

In overnight electronic trading, CBOT March wheat rose 2 1/2 cents to US$4.59 1/2, while March KCBT hard red wheat slipped 1/2 cent to US$4.83 1/4.

 

"The wheat number was fundamentally neutral," said Bill Nelson, associate vice president of AG Edwards & Sons in St. Louis.

 

The USDA estimated 2006-07 wheat ending stocks at 472 million bushels, unchanged from the previous report and slightly below the 474 million bushel average analyst estimate.

 

The USDA trimmed the world wheat carryout stocks by 1 million metric tonnes while slightly increasing world production.

 

"The report was nothing for wheat," a commission house broker said. Wheat will follow corn with spread trading a major feature as participants roll out of March and into May, he added.

 

The USDA left corn ending stocks unchanged and corn will continue to be supported by the need for acres to expand to meet the needs of ethanol, a floor trader said.

 

In the report, the USDA raised Argentina's corn production to 21.0 million metric tonnes from 19.0 million but trimmed South Africa's corn crop by 500,000 metric tonnes to 9.5 million.

 

On daily technical charts, CBOT March wheat closed mid-range Thursday and the bears still have a slight technical advantage, a market technician said.

 

First resistance for CBOT March is seen at Thursday's high of US$4.60 and then at US$4.65. First support is pegged at US$4.52 and then at this week's low of US$4.49.

 

March KCBT wheat prices closed nearer the session high Thursday, but market bears still have a technical advantage, the technician said.

 

First resistance for KCBT March is seen at US$4.86, and then at US$4.90. First support is seen at US$4.77 3/4 and then at US$4.74.

 

In the U.S. Midwest soft red wheat growing area, dry weather is forecast with some light snow possible in southern sections Saturday and into Sunday and Monday, DTN Meteorologix Weather said. Temperatures are expected to average below-to-well below normal west and below-to-much below normal east in the period, Meteorologix Weather said.

 

In the U.S. hard red winter wheat belt, light precipitation is expected Saturday and Sunday in the northern and eastern sections of the region, DTN Meteorologix Weather said. A chance for light-to-locally moderate precipitation is possible Monday in northern and eastern areas. Temperatures are forecast below normal Saturday and near-to-above normal south and below normal north on Sunday, Meteorologix said.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders repot for the period ending Feb. 6.