March 2, 2007

 

US Wheat Outlook on Friday: Seen 6-7 cents lower on spillover, e-CBOT losses

 

 

U.S. wheat futures are expected to begin Friday's day session activity 6-to-7 cents lower as spillover selling from Thursday and weaker prices in overnight trading are expected to pressure wheat futures on the opening, floor analysts said.

 

In overnight electronic trading, CBOT May wheat dropped 6 1/2 cents to US$4.72 1/2 per bushel, while May KCBT hard red wheat fell 6 1/4 cents to US$4.99.

 

Speculative liquidation should continue to keep wheat on the defensive, a floor trader said. Commodity markets in general continue to come under pressure and technically wheat is weak, the trader said.

 

The U.S. winter wheat crop isn't experiencing any problems, and there is no fresh news out, so there is little to support the market fundamentally, a commission house analyst said.

 

The U.S. Department of Agriculture estimates 2007-08 wheat planted area at 60 million acres with production at 2.17 billion bushels, with a yield of around 42.5 bushels per acre.

 

The projections from the USDA won't have much impact as the market is waiting on the planting intentions report at the end of the month for a better idea of what farmers will plant, the analyst added.

 

Deliveries posted against CBOT March wheat were 3,104 contracts. Large issuers included the customer account of Dowd Wescott, which issued 608 contracts and the customer account of Man Financial which issued 528 contracts.

 

Large stoppers included the customer account of the Astro division of UBS Securities, which stopped 487 contracts and the customer account of Dowd Wescott, which stopped 423 contracts. The last trade assigned was Mar. 1.

 

In the U.S. Midwest soft red winter wheat belt, a few snow showers are expected Saturday in western sections of the region with mostly dry weather Sunday. In the eastern half of the region, dry weather with scattered snow showers are possible Saturday with dry weather expected on Sunday and Monday, DTN Meteorologix Weather said. Temperatures are forecast well-below to below-normal west and below-to-much below normal east.

 

In the U.S. hard red winter wheat belt, mainly dry conditions are expected Saturday through Monday with temperatures averaging above normal, DTN Meteorologix Weather said.

 

On daily open auction technical charts, CBOT May wheat settled near mid-range, though some near-term chart damage has occurred this week, a market technician said. Market bulls' next upside price objective is to close May above US$4.95 1/2 per bushel which would fill to the upside Tuesday's downside price gap.

 

First resistance is pegged at US$4.85 and then at US$4.90. First support is seen at US$4.75 and then at US$4.70.

 

May KCBT settled near mid-range Thursday but bulls are fading, the technician said. First resistance is seen at Thursday's high of US$5.09 and then at US$5.15. First support lies at US$5.00 and then at US$4.95.

 

In other wheat news, the Pusan branch of the Korea Feed Association bought 55,000 metric tonnes of optional origin feedwheat in a tender concluded Thursday, a trader in Korea said Friday.

 

In addition, the Seoul branch of the KFA bought 55,000 metric tonnes of Chinese feedwheat from Cargill, traders said.

 

India hasn't extended its zero import duty on imported wheat with the import duty now reverting back to 50%. The decision not to continue duty-free wheat imports reflects confidence that India's wheat harvest will be good, an Indian wheat industry official said.