March 27, 2008

 

US Wheat Outlook on Thursday: Seen firmer, waiting on Egyptian tender

 

 

U.S. wheat futures are poised to start Thursday's day session stronger on follow-through buying, with traders waiting for the results on an Egyptian tender.

 

Benchmark Chicago Board of Trade May wheat is called to open 10 to 15 cents per bushel higher. In overnight electronic trading, CBOT May wheat jumped 17 cents to US$10.50.

 

Wheat overnight bounced from losses Wednesday after Egypt's state-owned General Authority for Supply Commodities said it was tendering to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment from May 11-31. Egypt, a major buyer on the world wheat market, typically tenders for that amount and buys more.

 

Egypt last week bought 415,000 tonnes of U.S. soft red wheat in a tender. A breakdown of bids from the latest tender shows U.S. offers remain competitive, a CBOT floor trader said.

 

Total weekly U.S. wheat export sales of 562,800 tonnes were within trade expectations, which ranged from 400,000 to 750,000 tonnes. Net old-crop wheat sales of 379,900 tonnes were "much improved from the previous week," the U.S. Department of Agriculture said.

 

Top old-crop buyers included Nigeria, which took 126,500 tonnes, and Yemen, which bought 82,300 tonnes. Cancellations of old-crop export business were considered light at 37,200 tonnes, a trader said.

 

There was not too much other news out for the wheat markets, traders said. Industry members continue to look ahead to the USDA's estimates for prospective plantings and quarterly grain stocks, due out Monday.

 

"Traders are anxiously awaiting Monday morning's key USDA planting intentions report," a technical analyst said.

 

Bulls' next upside price objective is to push and close CBOT July wheat above solid resistance at this week's high of US$11.10, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below major psychological support at US$10.00.

 

First resistance is seen at US$10.50 and then at US$10.75. First support lies at US$10.15 and then at US$10.00.

 

There is at least some potential for significant precipitation in wheat areas of the U.S. central and southern Plains during the next five to eight days, DTN Meteorlogix said in a forecast. However, the highest potential is still in the east and not in drier areas of the western Plains, the weather firm said.

 

In other news, the Ukrainian government has increased the current marketing year's grain export quota and extended it until July 1, according to the Agriculture Ministry's press service. That means the government has decided to extend the grain export quota until the end of the current marketing year, beyond March 31 as was the case before.

 

The minister said the quota had been increased according to a proposal made by the economy ministry. The proposal provided for the wheat export quota being increased to 203,000 tonnes from 200,000 tonnes.