February 15, 2007

 

US Wheat Outlook on Thursday: Up 2-3 cents on steady e-CBOT, position squaring

 

 

U.S. wheat futures are forecast to begin 2-to-3 cents higher Thursday as a steady tone in overnight trade, position squaring and spillover support from corn and soybeans is expected to provide early strength in the absence of fresh inputs, sources said.

 

In overnight electronic trading, CBOT March wheat rose 2 cents to US$4.53 per bushel, while March KCBT hard red wheat gained 3 cents to US$4.80 1/4.

 

The wheat should draw some support from higher prices overnight and see some position squaring after Wednesday's price weakness, a floor analyst said.

 

However, there was little fresh news out other than routine export business and the market continues to lack a feature, he added.

 

Corn is called to open 3-4 cents higher and wheat should trade higher on spillover, a floor trader said. The need to produce enough corn this summer continues to draw underlying speculative support, the trader added.

 

The U.S. Department of Agriculture's weekly export sales report, normally due out at 8:30 a.m. EST (1330 GMT), has been delayed until Friday.

 

In the U.S. Midwest soft red winter wheat belt, mainly dry conditions are forecast Friday with the chance for light snow late with light snow possible on Saturday in the eastern section of the region, DTN Meteorologix Weather said. Temperatures expected to average below normal.

 

In the U.S. hard red winter wheat belt, there is a chance for light precipitation Friday with mainly dry weather expected on Saturday, DTN Meteorologix Weather said. Temperatures are expected to average near-to-above normal west and below normal east on Friday and above normal west and near normal east on Saturday, Meteorologix Weather said.

 

On daily open auction technical charts, CBOT March wheat hit a fresh five-week low and the bears have the near-term technical advantage, a market technician said. The next downside price objective for the bears' is closing prices below solid support at the January low of US$4.47 1/2.

 

First resistance for CBOT March is seen at US$4.55 and then at US$4.61. First support is at US$4.47 1/2, and then at US$4.40.

 

March KCBT wheat prices closed near the session low and prices are still in a four-month old downtrend on the daily bar chart. The bears' next downside objective is closing prices below the January low of US$4.67 per bushel, the technician said.

 

First resistance for KCBT March is seen at US$4.80 and then at US$4.85. First support is seen at US$4.75 and then at US$4.74.

 

In other wheat news, India's recent ban on wheat exports is aimed at ensuring supplies and limiting inflation, government and trade officials said Thursday.

 

The Taiwan Flour Millers Association bought 42,650 metric tonnes of U.S. wheat consisting of 26,240 tonnes of dark northern spring wheat and 16,410 metric tonnes of hard red winter wheat.

 

Japan's Ministry of Agriculture bought 115,000 metric tonnes of wheat in a tender concluded Thursday, an agricultural ministry official said. 70,000 metric tonnes was of U.S. origin.

 

Ukraine wheat stocks on Feb. 1 totaled 4.8 million metric tonnes compared to 5.5 million tonnes a year earlier, the Agriculture Ministry said. In the first half of the current marketing through Dec. 1, the country exported 2.3 million metric tonnes of wheat.

 

The EU's wheat supply/demand balance sheet is closely balanced as internal demand offsets a lack of competitiveness on the global export market, the monthly analytical report Strategie Grains said Thursday.