April 12, 2007

 

US Wheat Outlook on Thursday: 1-2 cents higher on strong export sales

 

 

Strong export sales are expected to push U.S. wheat futures to start Thursday's day session modestly higher, 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 closed up 1/4 cent at US$4.56 1/2, and CBOT July wheat ended down 1/4 cent at US$4.70 1/2.

 

Wheat did not end lower like its neighbors, corn and soybeans, and should see some early support from higher-than-expected export sales, a CBOT floor analyst said.

 

The U.S. Department of Agriculture said export sales for the week ended April 5 were 693,300 metric tonnes, sharply above trade expectations that sales would range from 200,000 to 450,000 tonnes.

 

The sales were 67% above the prior four-week average, the USDA said. Big buyers included Japan, which took 144,200 tonnes, and Egypt, which bought 55,400 tonnes. Unknown destinations bought 161,000 tonnes, according to the USDA.

 

In related news, Japan bought 145,000 metric tonnes of wheat in a routine tender that concluded Thursday for delivery sometime in June, an agriculture ministry official said. The tender includes 60,000 tonnes of U.S. wheat, 40,000 tonnes of Canadian wheat and 45,000 tonnes of Australian wheat.

 

The bulls' next upside price objective is to close CBOT July prices above solid resistance at this week's high of US$4.88 1/2, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$4.60.

 

First resistance is seen at 4.75 and then at Wednesday's high of US$4.80. First support lies at Wednesday's low of US$4.70 and then at US$4.65.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is closing July wheat prices above solid chart resistance at this week's high of US$4.95, the technical analyst said. The bears' next downside objective is closing prices below solid support at US$4.59 1/4.

 

First resistance is seen at Wednesday's high of US$4.80 and then at US$4.83 3/4. First support is seen at Wednesday's low of US$4.72 and then at this week's low of US$4.66.

 

The cold snap in the Plains and more cold in the forecast is an underlying bullish factor in the market, the technical analyst said.

 

Damage due to a hard weekend recent freeze is still being assessed in U.S. winter wheat growing regions. Rainfall in the U.S. Southern Plains during the coming days may help wheat recover from the freeze in some areas, DTN Meteorlogix reported.

 

In other news, the European Union's current wheat balance is "even more precarious" than it was a month ago, according to analytical report Strategie Grains Thursday. While the E.U.'s main wheat exporting nations aren't showing any major deficits, Strategie Grains said there is no room for maneuver either.

 

Strategie Grains estimates the E.U. will have 11.5 million metric tonnes of wheat available for export in 2007-08, which is about steady on the year but still lower than the 2005-06 campaign. However, despite the increased supplies Strategie Gains holds there still won't be a significant surplus to offer to the government intervention program.

 

Indian government agencies, meanwhile, have so far purchased 661,159 metric tonnes of locally produced wheat as part of plans to procure a total of 15 million tonnes in 2007, an official said. Whether the government will have to import wheat to run its subsidized sales programs will depend on the size of its local purchases.

 

The procurement season for wheat runs from April to March, although the bulk of the purchases are made between April and June each year.