April 20, 2006

 

US Wheat Outlook on Thursday: KCBT up 2-4 cents on weather; CBOT up 1-3 cents

 

 

U.S. wheat futures were called to open higher Thursday, led by gains in Kansas City hard red winter wheat futures as weather forecasts called for less rain this week across Kansas and southern Nebraska than had been seen Wednesday, brokers said.

 

"It's been a volatile market over there (Kansas City Board of Trade hard red winter wheat)," said Don Roose, of U.S. Commodities. "Export sales, if you combine the two years, were probably on target. But I think the trade is definitely focused on Kansas and Nebraska wheat.

 

"Kansas wheat is moving into the heading stage rapidly and early, which means we need some rain soon," Roose added. "I think the trade has kind of written off the Texas and Oklahoma crops as being very poor crops. We could still get trendline yields in Kansas, so we're in that sorting out stage."

 

U.S. weekly wheat export sales totaled 392,000 metric tonnes for old- and new-crop, compared with estimates of 250,000 to 350,000 metric tonnes, traders noted.

 

Net weekly U.S. wheat export sales of 210,800 metric tonnes were 18% below the previous week and 43% under the prior 4-week average, according to the U.S. Department of Agriculture. The main buyers were Japan (60,900 metric tonnes), Taiwan (41,900 tonnes), Venezuela (34,700 tonnes) and Mexico (31,900 tonnes).

 

Sales of 181,200 tonnes for delivery in the U.S. 2006/07 marketing year were primarily for Mexico (98,700 tonnes) and the Philippines (60,500 tonnes).

 

In the overnight e-CBOT session, most-active July wheat closed up 1/2 cent at US$3.68 1/4 after closing Wednesday near the session high.

 

"It will take a close back above resistance at US$3.75 to provide the bulls with some fresh upside technical momentum," said a technical source. "A close below the March low of US$3.51 would produce serious chart damage to suggest another solid leg down in prices in the near term."

 

First resistance for CBOT July wheat was seen at US$3.70--this week's high--and then at US$3.75. First support was put at US$3.62-this week's low--and then at US$3.60.

 

In overnight trade, Kansas City Board of Trade July wheat ended up 4 cents at US$4.55 per bushel.

 

"It will take a close above last week's contract high of US$4.71 1/2 to provide the bulls with some fresh upside technical momentum," a technical source said.

 

"A close below support at US$4.37 would provide the bears with fresh downside technical momentum."

 

First resistance for KCBT July was seen at US$4.60--this week's high--and then at US$4.62 1/2. First support was seen at US$4.45 1/2--Wednesday's low--and then at US$4.40.

 

U.S. wheat futures traders noted May wheat options will expire Friday.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Thursday, with a 3-cent gain at the Texas Gulf and at Dodge City, Kan.; soft red winter wheat basis bids were mixed, with a 6-cent loss in the Kansas City SRW truck bid; and spring wheat basis bids were steady to firm with 2-cent gains in Portland, Grand Forks and Minot, grain merchandisers said.

 

In global wheat news, Morocco bought 95,000 tonnes of European soft wheat and Japan bought 101,000 tonnes of wheat for June 1-30 shipment, including 40,000 tonnes of U.S. wheat.

 

Russia exported in March 658,800 metric tonnes of wheat, 15.3% more than in February and nearly double the amount exported in March 2005, according to the federal customs service. The largest importers of Russian wheat in March were Egypt 223,100 tonnes, Pakistan 121,500 tonnes, Azerbaijan 87,800 tonnes, Arab Emirates 49,800 tonnes and Georgia 39,500 tonnes.

 

Finally, India's first cargo of imported wheat in six years, 500,000 tonnes of Australian wheat, is due to arrive Sunday, sources said.

 

Last month, Indian Food Minister Sharad Pawar said the country was considering importing another 1.5 million-2.0 million tonnes of wheat to build buffer stocks.

 

India's local wheat crop is harvested in April and May.