May 11, 2006

 

US Wheat Outlook on Thursday: Steady-firm on positioning before USDA

 

 

U.S. wheat futures were called to open steady to firm in Kansas City Board of Trade and Minneapolis Grain Exchange hard wheat futures Thursday due to good weekly U.S. hard wheat export sales and positioning ahead of Friday's U.S. Department of Agriculture 2006 wheat production and end stocks data, brokers said.

 

Cold U.S. Plains temperatures early Thursday weren't severe enough to harm the rapidly maturing hard red winter wheat crop, they said.

 

In the overnight e-CBOT session, most-active July wheat closed down 1/4 cent at US$3.84 1/4 after prices closed Wednesday near the session low.

 

"Bulls still have solid technical power," said a technical source. "Traders are awaiting Friday morning's USDA supply and demand report, and also Thursday morning's weekly export sales report. The next upside price objective for the bulls is strong resistance at the contract high of US$4.00 a bushel. It would take a close below solid support at US$3.70 to provide the bears with fresh downside technical momentum."

 

First resistance for CBOT July wheat was seen at US$3.90 - this week's high - and then at US$3.94. First support was put at US$3.84 - Wednesday's low - and then at US$3.80.

 

Kansas City Board of Trade July wheat ended overnight up 1 cent at US$4.66 1/4 per bushel.

 

"Bulls still have the solid technical advantage," said a technical source. "Look for higher volatility in the near term, which is typical for serious weather markets in grains. The next major upside price objective for the bulls is major psychological resistance at US$5.00 a bushel. A close below the late-April low of US$4.26 would provide the bears with fresh downside technical momentum."

 

First resistance for KCBT July wheat was seen at US$4.74 1/2 - the contract high - and then at US$4.80. First support was seen at US$4.65 - Wednesday's low - and then at US$4.62 1/2.

 

There were 34 deliveries posted Thursday against CBOT May wheat futures with the last date available of May 3.

 

Wheat registrations late Wednesday at the CBOT totaled 1,675 lots, unchanged from the previous day.

 

There were 25 redeliveries of KCBT wheat and no deliveries against MGE May wheat on Thursday.

 

The USDA reported early Thursday that weekly U.S. wheat export sales (old- and new-crop combined) totaled 383,800 tonnes, led by sales of new-crop hard red winter wheat to Mexico.

 

"The sales are routine, but a little bit supportive," said Terry Reilly, a grain analyst at Citigroup in Chicago.

 

In overnight export business, Japan bought 90,000 tonnes of wheat including 50,000 tonnes of U.S. wheat.

 

Traders awaited any news from Iraq and India as to tender details.

 

Cash U.S. hard red winter wheat basis bids were unchanged Thursday; soft red winter wheat basis bids were mixed; and spring wheat basis bids were unchanged, grain merchandisers said.

 

Traders expected the USDA to report early Thursday that weekly U.S. wheat export sales totaled 250,000 to 350,000 metric tonnes.

 

Positioning was also expected Thursday ahead of Friday's USDA 2006 U.S. wheat production and ending stocks reports.

 

Analysts on average expected the USDA to report Friday 2006 U.S. all-wheat production at 1.9575 billion bushels, down from the 2005 U.S. wheat production of 2.105 billion.

 

U.S. winter wheat production was seen at 1.3730 billion bushels, down from last year's 1.499 billion; hard red winter wheat production was seen at 745 million bushels, down from last year's 930 million; soft red winter wheat production was seen at 359 million, above last year's 309 million; and white wheat production was seen at 258 million bushels, down from last year's 260 million bushels.

 

Analysts expected the USDA to report 2005-06 U.S. wheat ending stocks totaled 535 million bushels, down from the previous year's 540 million. U.S. wheat ending stocks for 2006-07 were seen at 454 million bushels.