March 29, 2007

 

US Wheat Outlook on Thursday: Up 1-2 cents on e-CBOT, eyeing Friday USDA report

 

 

U.S. wheat futures are expected to start Thursday's day session stronger after trading higher overnight and amid positioning ahead of the release of important new government reports, analysts said.

 

Benchmark Chicago Board of Trade May wheat is called to open up 1 to 2 cents per bushel.

 

In e-cbot trading, CBOT May wheat futures were up 1 1/4 cents at US$4.58 1/4.

 

Trading during the day session will likely be choppy as cautious market participants even up positions before the U.S. Department of Agriculture releases its prospective plantings and grain stocks reports, analysts said. The reports are due out at 8:30 a.m. EDT Friday.

 

The trade has been eager to see the USDA's estimates as they will give an indication of how much corn U.S. farmers are expected to plant this spring. Farmers are expected to plant millions more acres of corn, at the expense of other crops, to take advantage of high prices and growing demand for ethanol.

 

CBOT May wheat prices Wednesday closed nearer the session high on short covering in a bear market, a technical analyst said. Bears still have the near-term technical advantage, he added.

 

The next downside price objective for the bears is closing CBOT May prices below solid support at US$4.50. The bulls' next upside price objective is to close prices above solid resistance at US$4.70.

 

First resistance is seen at Wednesday's high of US$4.59 and then at this week's high of US$4.62 1/2. First support lies at this week's low of US$4.51 1/4 and then at US$4.50.

 

At the Kansas City Board of Trade, the bears' next downside objective is closing May prices below solid support at the September 2006 low of US$4.56. The bulls' next upside price objective is closing prices above solid chart resistance at US$4.90.

 

First resistance is seen at Wednesday's high of US$4.74 and then at US$4.78. First support is seen at Wednesday's low of US$4.68 1/2 and then at US$4.65.

 

Wheat should not feel much of a boost from weekly export sales data, which was within trade estimates, an analyst said.

 

The USDA reported sales for the week ended March 22 were 528,400 metric tonnes, while analysts had predicted sales would be in the range of 400,000 tonnes to 600,000 tonnes. The sales were 11% above the previous week and 27% above the prior four-week average. Major buyers included Egypt, which took 123,000 tonnes, and Morocco, which bought 120,000 tonnes.

 

Looking at the weather, widespread rains and thunderstorms in the U.S. Southern Plains will maintain soil moisture for spring growth of winter wheat, DTN Meteorlogix said. In the eastern Midwest, little rainfall and above normal temperatures are on tap for Friday, according to the weather firm.

 

In China, major winter wheat areas should have adequate moisture for current needs, although the northern wheat region will need more rain as the wheat enters reproduction during the coming weeks, Meteorlogix said.

 

In other news, India won't hesitate to import more wheat if needed, although production this year is likely to exceed 72.6 million metric tonnes, the agriculture minister said Thursday. Last calendar year, India produced 69.48 million tonnes of wheat and imported 5.5 million tonnes, according to government estimates.

 

Australian wheat production, meanwhile, is expected to rebound in 2007-08 in a drought recovery combined with firm domestic grain prices, according to a U.S. Department of Agriculture attach¨¦ report. Production is forecast at 22.1 million metric tonnes, up sharply from the 10.5 million tonnes estimated for the previous year.