March 4, 2010

 

US Wheat Outlook on Thursday: Lower; poor weekly export sales

 

 

U.S. wheat futures are expected to slide on Thursday's open thanks to poor demand and outside market pressure.

 

Chicago Board of Trade wheat is called 5 to 7 cents lower. In overnight trade, March CBOT wheat was down 7 1/2 cents to US$4.96 per bushel and May wheat was down 6 3/4 cents to US$5.09.

 

The market fundamentals are weak, traders and analysts say, due to abundant world supplies, which are curtailing demand for U.S. wheat.

 

The weak demand was highlighted by poor weekly export sales reported Thursday. The U.S. Department of Agriculture reported net sales of 104,100 metric tonnes, mostly for 2009-10 marketing year. Sales were well below analyst guesses of between 250,000 and 550,000 metric tonnes, and down from 409,000 the prior week.

 

Internationally, India is considering allowing wheat exports from its bulging federal stocks to free up storage space for the next crop, which is set to touch a record of more than 80 million metric tonnes.

 

Federal Food and Agriculture Minister, Sharad Pawar, Thursday said a panel of ministers will decide on whether to open up wheat exports at its next meeting, scheduled for later this month.

 

"We have not made up our minds yet (for wheat exports). We have not taken any decision. But, it will be discussed in the next inter-ministerial panel meeting. We have to take some definitive view on this," Pawar told reporters on the sidelines of a farmers' fair.

 

Ag Resource Co. said in a morning commentary that "all signs point to India returning as a net exporter of grain."

 

Wednesday gains were attributed to short-covering, a weaker dollar and technical buying. But a technical analyst said that bears still have the near-term technical advantage.

 

The next downside price objective for the wheat futures bears is pushing and closing March prices below solid technical support at the February low of US$4.80 3/4, the technical analyst said. The next upside price objective is to push and close March futures prices above solid technical resistance at this week's high of US$5.26 a bushel.

 

First resistance is seen at Wednesday's high of US$5.17 3/4 and then at US$5.26. First support lies at US$5.10 and then at Wednesday's low of US$5.03 3/4.

 

In other export news, Japan's Ministry of Agriculture, Forestry and Fisheries Thursday bought 132,000 metric tonnes of wheat in a regular tender, a ministry official said. Of that, 65,000 metric tonnes will be from the U.S.

 

The wheat of U.S., Canadian and Australian origin in six cargoes is for shipment between April 16 and May 20.