April 27, 2006

 

US Wheat Outlook on Thursday: Down 1-2 cents on China, e-CBOT, US weather

 

 

U.S. wheat futures were called to open down 1-2 cents on Thursday on worries about a slowdown in China's economy due to a 27-basis-point increase in bank lending rates, brokers said.

 

Forecasts for rains beginning Thursday evening in key maturing U.S. hard red winter wheat fields was also expected to weigh on Kansas City Board of Trade wheat futures, they noted.

 

Weekly U.S. wheat export sales totaling 255,900 metric tonnes were nearer the low end of analyst estimates for 200,000 to 500,000 tonnes, brokers said.

 

Net old-crop wheat sales of 164,200 metric tonnes were 22% below the previous week and 47% under the prior 4-week average, according to the U.S. Department of Agriculture.

 

In overnight wheat export news, Japan bought 103,400 tonnes of wheat including 63,400 tonnes of U.S. wheat.

 

In the overnight e-CBOT session, most-active July wheat closed down 1 3/4 cents at US$3.60 per bushel.

 

"It will take a close back above resistance at US$3.70 to provide the bulls with some fresh upside technical momentum," a technical source said. "Bulls do not want to see a close below last week's low of US$3.57 1/2. It would take 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$3.65 and then at US$3.67 1/2 - Wednesday's high. First support was seen at US$3.60 3/4 - Wednesday's low - and then at US$3.57 1/2 - last week's low.

 

Kansas City Board of Trade July wheat ended overnight down 2 1/4 cents at US$4.43 1/2 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 wheat was seen at US$4.50 and then at US$4.55. First support was seen at US$4.43 and then at US$4.40 - this week's low.

 

Cash U.S. hard red winter wheat basis bids were steady to weak Thursday; soft red winter wheat basis bids were mixed, with a 7-cent gain in St. Louis and a 3-cent loss in the Kansas City truck bid; and spring wheat basis bids were unchanged, grain merchandisers said.

 

Last-minute rolling of nearby May positions into deferreds was expected ahead of Friday's first notice day for the three U.S. May wheat futures contracts, brokers said.