March 15, 2007
US Wheat Outlook on Thursday: Up 3-4 cents amid carryover buying, momentum
U.S. wheat futures are expected to start Thursday's day session firmer in tune with gains in overnight electronic trading, floor traders said.
Benchmark Chicago Board of Trade May wheat is called to open 3 to 4 cents higher per bushel.
In e-cbot trading, CBOT May wheat rose 4 1/4 cents to US$4.67 1/2.
There is little fresh news out for wheat, and prices will likely follow activity in neighboring markets, notably CBOT corn, a floor analyst said. Corn and outside markets were stronger overnight.
There was some short covering after recent declines that may continue during the day session, traders said. Follow-through buying from the overnight should also lift prices early, they added.
The U.S. Department of Agriculture announced weekly export sales for the week ended March 8 totaled 443,400 metric tonnes, which was within trade expectations. Analysts had expected to see sales in the range of 350,000 tonnes to 600,000 tonnes.
The weekly sales were 5% above the previous week and 14% over the prior four-week average, according to the USDA. Big buyers were Mexico, which bought 64,400 tonnes; Nigeria, which bought 46,600 tonnes; and South Korea, which bought 41,600 tonnes.
Technically, the chart for wheat looks weak, traders said.
"More near-term technical damage occurred Wednesday," a technical analyst said.
The next downside price objective for the bears is closing CBOT May prices below solid support at US$4.50, the analyst said. The bulls' next upside price objective is to close prices above solid resistance at US$4.85.
First resistance is seen at Wednesday's high of US$4.66 1/2 and then at US$4.70. First support lies at US$4.60 and then at Wednesday's low of US$4.56.
At the Kansas City Board of Trade, May wheat prices Wednesday closed lower and near mid-range.
"Bears have the near-term technical advantage," the technical analyst said.
The bulls' next upside price objective is closing KCBT May prices above solid chart resistance at US$5.00. The bears' next downside objective is closing prices below solid support at the January low of US$4.75 1/2.
First resistance is seen at Wednesday's high of US$4.91 and then at US$4.95. First support is seen at US$4.85 and then at Wednesday's low of US$4.82 1/2.
In other news, supply and demand of wheat in the European Union is closely balanced, leaving the outlook for the remainder of the 2006-07 marketing year "fragile," according to Strategie Grains monthly report released Thursday.
With few carryover stocks, the market outlook for 2007-08 is also volatile. Despite improved crop prospects, world wheat stocks will remain low in 2007-08, Strategie Grains said.
Growing conditions look largely favorable for winter wheat in the U.S. Southern Plains, traders noted.
"We appear to be heading towards a wetter period for the major wheat areas of the Southern Plains," DTN Meteorlogix said. "Should this verify it would make for very favorable conditions for early developing wheat."
In the eastern Midwest and Delta, rains overnight were heavier than expected. This makes for very wet conditions through some wheat fields of Illinois, Indiana and Ohio, Meteorlogix said.
In China, episodes of rain and cool weather for southern wheat areas will maintain soil moisture at adequate to surplus levels, the weather firm reported. This will mostly favor crops, although it will likely delay field work, Meteorlogix aid.
In other news, four South Korean flour mills have bought 17,700 metric tonnes of U.S. No. 1 wheat from trading house Cargill in a tender concluded Wednesday, a trader in Seoul said Thursday. The shipment is expected to reach South Korea between April 20 and May 20.
Argentina, meanwhile, has reopened the wheat flour export registry, which allows for the issuance of new export permits, after reaching an agreement with the miller federation, the Agriculture Secretariat said. The government closed the registry for wheat and wheat flour last week in the face of soaring export declarations.
