May 3, 2007

 

US Wheat Outlook on Thursday: 2-4 cents lower on wheat tour news, poor exports

 

 

U.S. wheat futures are expected to begin trading 2-to-4 cents lower Thursday as better-than- expected reports from the hard red winter wheat tour in Kansas and weak export sales are expected to pressure prices at the opening, analysts said.

 

In overnight electronic trading, CBOT July wheat declined 3 1/2 cents to US$4.90 per bushel, while July KCBT hard red wheat fell 6 1/2 cents to US$4.78 1/4.

 

Wheat should be lower to start as the results from the hard red winter wheat tour indicate the crop came through the early April freeze better than expected, a commission house analyst said.

 

In a survey of over 200 western Kansas wheat fields crop scouts surveyed Wednesday, the average yield in western Kansas fields were pegged at 43.2 bushels per acre, compared to the 33.5 bushels per acre scouts estimated in 2006.

 

Besides the wheat tour results there remains a lack of fresh news and trading Thursday might be similar to the choppy tone in the previous session, a floor analyst said.

 

Weather forecasts for parts of the European wheat growing areas indicate better chances for moisture in some of the drier areas which may also limit buying interest, the analyst said.

 

Weekly wheat export sales were "poor" under analysts' estimates, a floor trader said.

 

The U.S. Department of Agriculture reported weekly wheat export sales at 215,200 metric tonnes for the week ended April 26. Included in the sales were exports of 62,500 tonnes for delivery in the next crop year.

 

In the U.S. Midwest soft red winter wheat belt, there is a chance for showers and thundershowers Friday and Saturday with amounts of .25-1.00 inch and locally heavier for southern Illinois, central Indiana and southern Ohio, DTN Meteorologix Weather said. Temperatures are expected to average near-to-above normal during this period.

 

In the U.S. hard red winter wheat belt there is a chance for scattered thundershowers Friday in northern areas with thepossibility for additional thundershowers north and east on Saturday. Temperatures are expected to average near-to-above normal Friday and Saturday, Meteorologix Weather said.

 

On daily open auction technical charts, CBOT July wheat settled nearer the session low Wednesday and the bulls have faded, a market technician said. The bulls' next upside objective is closing prices above solid resistance at US$5.08 per bushel, with the bears' next downside objective closing prices below solid support at US$4.84, the technician said.

 

First resistance is seen at US$5.00 and than at US$5.07. First support is pegged at US$4.90, and then at US$4.84.

 

July KCBT closed nearer the session high Wednesday and the bulls' next upside price objective is closing prices above solid chart resistance at US$5.00 per bushel. First resistance is seen at US$4.86 and then at US$4.91. First support is seen at US$4.80 and then at US$4.76 1/2.

 

Deliveries posted against the May future were 1,553 contracts. Large issuers included the customer account of Man Professional Clearing, which issued 787 contracts and the customer account of SMW Trading, which issued 225 contracts. Large stoppers included the house account of Term Commodities which stopped 333 contracts and the customer account of the Astro division of UBS Securities which stopped 256 contracts. The last trade assigned was May 2.

 

In other wheat news, Russia's July 1, 2006-March 31, 2007 wheat exports were 8.73 million metric tonnes, down 3.3% from the 9.03 million tonnes exported the previous year, according to a report from the International Grain Company.