April 2, 2009

 

US Wheat Outlook on Thursday: Seen up 6-8 cents on spillover, overnight

 

 

Spillover strength from neighboring and outside markets is expected to support U.S. wheat futures at the start of Thursday's day session.

 

Chicago Board of Trade May wheat is called to open 6 to 8 cents a bushel higher. In overnight electronic trading, CBOT May wheat rose 7 3/4 cents to US$5.33 1/4.

 

Gains in CBOT corn and soy and in equities and crude oil should help boost wheat, an analyst said. Wheat is a "follower" of the other markets, said Jerry Gidel, analyst for North America Risk Management Services.

 

Total weekly U.S. wheat export sales of 383,900 tonnes were within trade expectations of 250,000 to 450,000 tonnes. It was "not a dynamite number, but it's not going to hurt us," Gidel said.

 

Export sales of 283,500 tonnes for delivery in 2008-09 were up 7% from the previous week and 1% from the prior four-week average, according to the U.S. Department of Agriculture. Top buyers included Taiwan, which booked 93,100 tonnes, and Thailand, which bought 50,600 tonnes.

 

Sales of soft red winter wheat, trading at CBOT, for delivery in 2008-09 were 13,700 tonnes, while sales of hard red winter wheat, trading at the Kansas City Board of Trade, were 65,400 tonnes, according to the USDA. Sales of hard red spring wheat, trading at the Minneapolis Grain Exchange, or MGEX, were 123,700 tonnes, the USDA said.

 

MGEX wheat is expected to widen its premium over CBOT wheat, AgResource Co. said in a note. MGEX May wheat overnight rose 6 1/4 cents at US$6.49 3/4.

 

"With increasing Russian prices, the hard versus soft spread should continue to perform," AgResource said.

 

Spring wheat is being supported by the ideas that fieldwork in the northern U.S. Plains will be delayed by flooding and that plantings will be reduced, Country Hedging said in a note. The region may see a drier trend, but cold temperatures will slow the drying process in fields, according to DTN/Meteorlogix.

 

In the central and southern Plains, additional significant precipitation appears likely during the 10-day period, Meteorlogix said. However, most of this precipitation will occur north of the typically drier southwest growing areas, the private weather firm said.

 

The next downside price objective for the bears is pushing and closing CBOT May wheat below solid technical support at US$4.98 1/2, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.63, he said.

 

First resistance is seen at this week's high of US$5.34 and then at US$5.50. First support lies at US$5.20 and then at Wednesday's low of US$5.15 3/4.