February 24, 2006

 

US Wheat Outlook on Friday: 2-3 cents higher on e-CBOT, outside markets

 

 

Wheat futures at the Chicago Board of Trade are predicted to open 2-3 cents higher Friday as stronger outside markets and higher prices in overnight activity are expected to provide support for futures, trade sources said

 

In overnight e-CBOT trading, March wheat rose 1 cent to US$3.67 1/4 per bushel, May gained 1 3/4 cents to US$3.79 1/4, and July rose 2 cents to US$3.89.

 

Overnight at the KCBT, March wheat rose 3/4 cent to US$4.34 3/4, and May gained 2 cents to US$4.41.

 

The market will try the upside to start after higher prices overnight and the stronger outside markets, but whether wheat can hold those gains is the US$64,000 dollar question, said a commission house analyst.

 

Export sales were decent but news that Egypt bought French wheat overnight is not positive, he added.

 

Egypt's General Authority for Supply Commodities, GASC bought 240,000 metric tonnes of French wheat overnight, a GASC official said.

 

The U.S. Department of Agriculture reported weekly export sales were 510,400 metric tonnes for the 2005-06 crop year and 79,000 tonnes in the 2006-07 crop year. Traders were expecting sales between 350,000 and 550,000 metric tonnes for the week ended Feb. 16.

 

Prospects for meaningful precipitation for the major hard red winter wheat growing area over the next 7-10 days are poor, said Joel Burgio, a meteorologist with DTN Weather.

 

There is a chance for showers, with amounts of .10-.50 inch and locally heavier, through north-central Texas Friday with heavier thunderstorms possible in eastern Texas, but east of most wheat areas, DTN weather said.

 

Temperatures over the next several days are expected to average above normal Friday, below normal Saturday and then above normal Sunday. Dry conditions are expected Monday and Tuesday in the region.

 

On technical charts, the next major upside objective is closing prices above psychological resistance at the US$4.00 level, a market technician said. He pegs first resistance for CBOT May wheat at US$3.80 and then at US$3.83 1/2, Thursday's high. First support is at US$3.75 and then at US$3.73 1/2, this week's low.

 

For May KCBT, he sets first resistance at US$4.41, Thursday's high and then at US$4.45. First support is seen at US$4.35 1/2, Thursday's low and then at US$4.30.

 

In other wheat news, Indian Food Minister Sharad Pawar said Friday the cost of importing wheat will be lower than supplying India's southern states with domestic output. The final decision on the price at which India will import 500,000 metric tonnes of wheat through the government owned State Trading Corp. will be taken in the next few days, he said.

 

The lowest bid for the Indian tender is that of Australian wheat exporter AWB Ltd. (AWB.AU) an STC source said Friday.

 

According to the tender, between 250,000 and 300,000 metric tonnes has to arrive by April and the wheat must be of the current 2005-06 crop.