April 30, 2009

 

US Wheat Outlook on Thursday: Seen higher, waiting for Egypt results

 

 

U.S. wheat futures are expected to start higher Thursday after rising overnight, with traders watching weather forecasts and waiting for the results of an Egyptian tender.

 

Chicago Board of Trade July wheat is called to open 4 to 6 cents per bushel higher. In overnight electronic trading, CBOT July wheat gained 5 cent to US$5.37.

 

Egypt's General Authority for Supply Commodities, the government's main wheat buying agency, is tendering to buy cargoes of 30,000 to 60,000 tonnes of optional-origin wheat for shipment May 22-31, traders said. The results will be watched to gauge the competitiveness of U.S. wheat on the world market, particularly against Black Sea and E.U. wheat.

 

Total weekly U.S. wheat export sales of 251,200 tonnes were below expectations of 300,000 tonnes to 550,000 tonnes. Net sales of 142,400 tonnes for delivery in 2008-09 were down 39% from the previous week and 31% from the prior four-week average.

 

Activity in neighboring and outside markets should help direct wheat, traders said. CBOT corn and soybeans are called to open stronger, and crude oil and equities should also be stronger, they said. Outside markets look "mildly supportive," a CBOT floor trader said.

 

The markets also are keeping an eye on weather in the northern U.S. Plains, where cool, wet conditions have slowed spring wheat planting. The region should be somewhat drier during the next few days, but it will remain cold, according to a forecast from DTN Meteorlogix.

 

"Precipitation may return to the area later in the weekend," the private weather firm said. "Spring planting likely continues very slow."

 

In other news, deliveries against the CBOT May wheat future on first notice day were heavier than expected at 8,122 contracts. Traders and analysts had estimated deliveries would be 3,000-5,000 contracts. Basis levels that are "historically very weak" encouraged heavy deliveries. Basis is the difference between cash prices and futures.

 

The next downside price objective for the bears is pushing and closing CBOT July wheat below major psychological support at US$5.00, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.50 1/2, he said.

 

Resistance is seen at US$5.40. First support lies at US$5.25 and then at US$5.18 1/4 and then at US$5.10 3/4, he said.