March 8, 2007

 

US Wheat Outlook on Thursday: Up 1-2 cents on firm outside markets, short Covering

 

 

U.S. wheat futures are predicted to begin Thursday's day session activity 1 to 2 cents higher on firm outside markets and the squaring of positions ahead of Friday's U.S. Department of Agriculture supply and demand reports, a commercial analyst said.

 

In overnight electronic trading, Chicago Board of Trade May wheat gained 1 3/4 cents to US$4.79 3/4 per bushel, while May Kansas City Board of Trade hard red wheat rose 3/4 cent to US$5.03 1/4.

 

Wheat should see some support from stronger outside markets and position squaring ahead of Friday's USDA reports, the commercial analyst said. Even though the report isn't expected to contain any major surprises, people will still want to cover some of their positions, he added.

 

U.S. wheat ending stocks for the 2006-07 marketing year are estimated at 473 million bushels, according to a survey of 12 analysts conducted by Dow Jones Newswires. This is almost unchanged with the 472 million bushels the USDA estimated in February. The USDA is scheduled to release the supply and demand report on Friday at 8:30 a.m. EST (1330 GMT).

 

The USDA reported weekly wheat export sales were 421,900 metric tonnes for the week ended March 1, within the 300,000-650,000 metric tonnes expected by analysts. Mexico, Japan and Nigeria were the largest buyers on the week.

 

A floor analyst said sales were within expectations and not expected to have much impact on the market.

 

In the U.S. Midwest, soft red winter wheat belt, showers with amounts 0.1-0.5 inch west and a trace-to-0.25 inch east are forecast for Friday with mainly dry weather expected on Saturday, DTN Meteorologix Weather said. Temperatures are expected to average above normal Friday and near to above normal Saturday.

 

In the U.S. hard red winter wheat belt, there is a chance for showers for both Friday and Saturday, with amounts of a trace-0.25 inch forecast, Meteorologix Weather said. Temperatures are expected to average above normal in the period.

 

On daily open auction technical charts, CBOT May wheat ended near the session high on short covering but some near-term technical damage has occurred recently, a market technician said. The bears' next downside objective is closing prices below this week's low of US$4.67 1/4, with the bulls' upside objective closing prices above US$4.85.

 

First resistance is seen at US$4.80 and then at US$4.82 1/2. First support is seen at US$4.74 and then at US$4.70.

 

May KCBT settled near mid-range Wednesday and the bulls and the bears remain on a level technical playing field, the technician said.

 

First resistance is seen at US$5.06, Wednesday's high, and then at US$5.09. First support lies at US$4.99 1/2 and then at US$4.95.

 

Deliveries posted against the March future were 657 contracts. Large issuers included the customer account of Fortis, which issued 268 contracts and the customer account of Dorman Trading, which issued 191 contracts.

 

Large stoppers included the customer account of the Astro division of UBS Securities, which stopped 363 contracts, and the customer account of Bank of America, which stopped 97 contracts. The last trade assigned was March 7. Preliminary open interest in March is 1,093 contracts.

 

In other wheat news, Japan's Agriculture Ministry purchased 125,000 metric tonnes of wheat in its weekly tender, an agriculture ministry official said Thursday. Included in the total was 40,000 metric tonnes of U.S. wheat.