February 14, 2008

 

US Wheat Outlook on Thursday: Firmer on demand; MGE march rallies on

 

 

U.S. wheat futures are expected to start Thursday's day session sharply higher amid supportive export demand news, with traders waiting to see the results of an Egyptian tender, analysts said.

 

Benchmark Chicago Board of Trade March wheat is called to open 25 to 30 cents per bushel higher. In overnight electronic trading, CBOT March wheat rose 27 cents to US$10.18 1/2. Kansas City Board of Trade March wheat overnight jumped 33 cents to US$10.74, and Minneapolis Grain Exchange March wheat soared 62 cents to US$18.25.

 

MGE March wheat continues to rally on strong demand for high-quality spring wheat and tight supplies, analysts said. The contract overnight set a new all-time high of US$18.33 1/4.

 

Egypt's state-owned General Authority for Supply Commodities said after the close of trading Wednesday that it is tendering to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment from March 15-31. GASC is looking to purchase U.S. hard red winter wheat, U.S. soft red wheat, U.S. soft white wheat, French milling wheat, Argentine wheat, Kazakhstan wheat or Canadian soft wheat, an official said.

 

GASC on Tuesday canceled a tender for wheat it had issued after the close Monday. Most U.S. wheat futures have pulled back this week after a record-breaking run-up in prices. CBOT March wheat Monday hit a high of US$11.53 and ended down more than US$1.60 from that price Wednesday.

 

"Wheat went on sale this week," a CBOT floor trader said.

 

The state-run Grain Board of Iraq on Thursday issued a new tender to buy at least 50,000 metric tonnes of wheat, the third such tender this year, the board said on its Web site. The board set the closing date for the new tender at 0900 GMT on Feb. 23.

 

Tunisia, meanwhile, is seeking 92,000 tonnes of optional-origin milling wheat and 25,000 tonnes of option-origin durum, according to a media report.

 

Total weekly U.S. wheat export sales for the week ended Feb. 7 were 157,700 metric tonnes, according to the U.S. Department of Agriculture. That was well below trade estimates of 250,000 to 800,000 tonnes.

 

Net old-crop sales were 83,000 tonnes, including heavy cancellations of 206,100 tonnes. Thirty-six weeks into the marketing year, total commitments for 2007-08 are 96% of the USDA's target, which the government raised earlier this month. New-crop weekly exports sales were 74,700 tonnes, the USDA said.

 

Looking at the new crop CBOT July contract, wheat bulls' next upside price objective is to push and close prices above resistance at US$9.50, a technical analyst said. The next downside price objective for the bears is pushing prices below psychological support at US$9.00, he said.

 

First resistance is seen at Wednesday's high of US$9.16 and then at US$9.25. First support lies at US$9.00 and then at Wednesday's low of US$8.96.

 

At the KCBT, bulls' next upside price objective is pushing and closing July wheat above psychological resistance at US$10.00, the analyst said. The bears' next downside objective is pushing prices below solid support at US$9.25.

 

First resistance is seen at Wednesday's high of US$9.88 and then at US$10.00. First support is seen at Wednesday's low of US$9.65 and then at US$9.50.

 

In other export news, no new export commitments have been declared in Argentina since the opening of wheat exports at the end of January as exporters may be concentrating on fulfilling previous contracts, analysts said. Before the registry closure, exporters had declared more than 7 million metric tonnes of 2007-08 wheat for export, according to the Agriculture Secretariat.