April 5, 2007

 

US Wheat Outlook on Thursday: 4-6 cents up on cold weather concerns, e-CBOT

 

 

U.S. wheat futures are expected to start Thursday's day session firmer on firmer overnight trade and amid growing concerns about cold weather hitting U.S. wheat growing areas, traders and analysts said.

 

Benchmark Chicago Board of Trade May wheat is called to open 4 to 6 cents higher per bushel.

 

In e-cbot trading, CBOT May wheat rose 6 3/4 cents to US$4.38.

 

DTN Meteorlogix forecasts that widespread frost or light freeze conditions will likely hit the Delta within the next five days. It's possible hard freeze conditions will occur in some areas, which would impact late jointing wheat or flowering wheat, the weather firm noted.

 

In the Southern Plains, temperatures will be much colder during the next three to four days, Meteorlogix said. A hard freeze is expected through Kansas.

 

Any jointing wheat could be at risk from readings in the upper teens or low 20s Farenheit for several hours, the weather firm reported. A frost or light freeze is possible as far south as southern Oklahoma, the firm said.

 

There is even a chance for frost in north-central Texas, but that will depend on skies clearing and winds dropping to very light, Meteorlogix said. Any heading or flowering wheat in either south Oklahoma or Texas would be at risk if readings get to 31 degrees Fahrenheit for one to two hours, the firm said.

 

The potential damage possible from the cold weather is making traders a bit shaky after a growing season that has featured near-ideal conditions so far, analysts said. The trade will be focused on weather forecasts for the weeks and months ahead, noted Vic Lespinasse, CBOT floor analyst with AG Edwards & Sons.

 

In other news, the U.S. Department of Agriculture released weekly export sales for the week ended March 29, which were not impressive for wheat, analysts said. The USDA reported sales totaled 214,000 metric tonnes, 60% below the previous week and 54% under the prior four-week average. The sales were under trade expectations that exports would range from 400,000 to 500,000 tonnes.

 

Still, the markets will be more focused on the weather than on the sales figures, an analyst said.

 

There will also likely be some squaring-up of positions near the end of the day session ahead of the three-day weekend, Lespinasse said. Wheat trading at the CBOT, KCBT and MGE will is canceled for Friday because of observance of Good Friday.

 

Uncertainty about the weather also will make traders cautious going into the weekend, analysts added.

 

The next downside price objective for the bears is closing CBOT May prices below solid support at this week's low of US$4.12, a technical analyst said. The bulls' next upside price objective is to close prices above solid resistance at US$4.55, which would fill on the upside last Friday's downside price gap on the daily bar chart.

 

First resistance is seen at Wednesday's high of US$4.37 and then at US$4.45. First support lies at Wednesday's low of US$4.25 and then at US$4.18.

 

At the Kansas City Board of Trade, the bears' next downside objective is closing May prices below solid support at this week's low of US$4.33. The bulls' next upside price objective is closing prices above solid chart resistance at US$4.66, which would fill on the upside last Friday's downside price gap on the daily bar chart.

 

First resistance is seen at Wednesday's high of US$4.57 1/2 and then at US$4.64. First support is seen at US$4.50 and then at Wednesday's low of US$4.46.

 

In other news, Japan bought 130,000 metric tonnes of U.S. wheat as part of a tender concluded Thursday. Japan also bought 20,000 tonnes of Canadian wheat and 20,000 tonnes of Australian wheat.