May 10, 2007

 

US Wheat Outlook on Thursday: Steady-2 cents down as traders await report

 

 

U.S. wheat futures are expected to start Thursday's day session steady to 2 cents lower per bushel following modest declines overnight and amid a lack of fresh news, floor traders and analysts said.

 

In e-cbot trading, Chicago Board of Trade July wheat fell 1 3/4 cents to US$4.80 1/4.

 

Market participants are waiting for the U.S. Department of Agriculture to put out its May supply and demand report on Friday, CBOT floor traders said. The report will include estimates for all-wheat and all-winter wheat production, along with estimates for old-crop and new-crop ending stocks.

 

"Today's a waiting game," said Vic Lespinasse, CBOT floor analyst for AG Edwards & Sons.

 

Wheat futures slipped a bit overnight, which is usually a good indicator that prices will start the day session on the defensive, a CBOT floor trader said. Still, CBOT corn and soybeans traded slightly higher overnight and could lend enough strength to wheat to bring it up to a steady opening, he added.

 

Weekly export sales figures released Thursday morning were within trade expectations and nothing to get excited about, floor traders said. The USDA reported old-crop sales for the week ended May 3 totaled 185,000 metric tonnes, while new-crop sales were 75,400 tonnes.

 

Old-crop sales were up 21% from the previous week but 50% below the prior four-week average, according to the USDA. Among the big buyers were South, which took 38,700 tonnes, and Taiwan, which bought 31,800 tonnes.

 

In new-crop sales, the Philippines bought 29,000 tonnes and Nigeria bought 23,100 tonnes.

 

"Sales look light," one CBOT floor trader said.

 

In related news, Japan said it bought 140,000 metric tonnes of wheat, including 60,000 tonnes from the U.S., in a routine tender concluded Thursday. The wheat is scheduled to arrive between June 21 and July 20.

 

The bulls' next upside price objective is to close CBOT July prices above solid resistance at US$5.00, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$4.65.

 

First resistance is seen at Wednesday's high of US$4.86 and then at US$4.90. First support lies at this week's low of US$4.79 and then at US$4.75.

 

At the Kansas City Board of Trade, bulls and bears are on a level near-term technical playing field, the analyst said. The bulls' next upside price objective is closing KCBT July wheat above solid chart resistance at US$4.90. The bears' next downside objective is closing prices below solid support at US$4.60.

 

First resistance is seen at Wednesday's high of US$4.79 1/4 and then at US$4.85. First support is seen at Wednesday's low of US$4.74 1/2 and then at this week's low of US$4.71.

 

Looking at weather conditions, increased disease pressure is still possible for hard red winter wheat in the U.S. Southern Plains as scattered rains in southern areas will maintain wet field conditions, DTN Meteorlogix said.

 

In central China, recent heat has increased stress to winter wheat, the weather firm said. The Ukraine, meanwhile, has had reports of light showers in the past 24 hours, although the region is still in a drier than normal weather pattern, according to Meteorlogix.

 

Australia, where wheat growers are aiming to recover from a severe drought last year, should see cooler weather and possible showers for the West Australia wheat belt during the five to seven day period, Meteorlogix said. Still, more rain will be needed to favor early growth of wheat during the coming weeks.

 

European wheat areas benefited from some rainfall Wednesday, and additional wet weather is likely for England, France, Benelux, Germany and Poland during the five-day period. Growers welcome the moisture after a very warm and mostly dry April, analysts said.