April 26, 2007

 

US Wheat Outlook on Thursday: Called 6-8 cents higher on weather, technicals

 

 

U.S. wheat futures are expected to begin Thursday's day time trading 6 to 8 cents higher, supported by continued weather concerns in both Europe and Australia along with technical and follow-through buying from Wednesday's strong close, a commission house analyst said.

 

In overnight electronic trading, CBOT July wheat rose 8 1/4 cents to US$5.28 3/4 per bushel, while July KCBT hard red gained 8 3/4 cents to US$5.12 1/2.

 

The weather is still dry in European growing areas as well as in Australia and the extent of any damage to the U.S. crop due to the recent freeze in still an unknown and that should continue to support wheat prices, a floor trader says.

 

Spillover buying from the overnight session will also act as support with additional strength from the positive technical chart pattern after July made a new contract high Wednesday, a commission house analyst said.

 

Weekly export sales were within expectations and may add to the positive tone, the analyst said.

 

The U.S. Department of Agriculture reported weekly wheat export sales were 421,500 metric tonnes for the week ended April 19, within sales estimates of 250,000-450,000 tonnes. Included in the total were sales of 143,200 tonnes for delivery in the next marketing year.

 

In the U.S. Midwest soft red winter wheat belt, drier weather is forecast for Friday with only a few light showers expected on Saturday, DTN Meteorologix Weather said. Temperatures are expected to average near-to-below normal Friday and near-to-above normal Saturday.

 

In the U.S. hard red winter wheat belt there is a chance for scattered or locally moderate showers Friday, with drier weather Saturday, Meteorologix Weather said. Temperatures are expected to average near-to-below normal Friday and near-to-above normal Saturday.

 

On daily open auction technical charts, CBOT July wheat gapped open higher on the daily bar charts Wednesday, traded limit up and hit a fresh contract high, a technical analyst said. The bulls have a solid near-term technical advantage and their next upside objective is closing prices above solid resistance at Wednesday's contract high of US$5.27 1/2 per bushel, the analyst said.

 

First resistance is seen at the contract high of US$5.27 1/2 and then at US$5.30. First support is seen at US$5.18, US$5.16 and then at US$5.08.

 

July KCBT hit a two-month high Wednesday and closed mid-range, the analyst said. First resistance is seen at US$5.07 and then at US$5.11. First support is seen at US$5.00 and then at US$4.95.

 

In other wheat news, Pakistan may export up to 1 million metric tonnes of wheat in the first half of the year, and then the government will likely review the current wheat policy, an official with the Pakistan Flour Millers Association said Thursday.

 

Pakistan is currently harvesting its heat crop with production expected at 22.5 million metric tonnes compared to 21.7 million tonnes produced last year.