May 24, 2007

 

US Wheat Outlook on Thursday: 2-4 cents higher on overnight, export sales

 

 

U.S. wheat futures are called to open Thursday's day session 2 to 4 cents higher per bushel amid follow-through buying from the overnight and support from strong export sales, traders said.

 

In e-cbot trading, Chicago Board of Trade July wheat rose 3 cents to US$4.79 1/2.

 

The U.S. Department of Agriculture released export sales figures for the week ended May 17 that were "pretty solid," a CBOT floor broker said. New-crop sales were 800,300 metric tonnes, above trade estimates of 250,000 to 550,000 tonnes, according to the USDA.

 

Some old-crop sales were rolled over to the new-crop, which is common this time of year, the floor broker said. Big buyers included Iraq, which took 200,000 tonnes, and the Philippines, which bought 74,500 tonnes. Unknown destinations took 174,000 tonnes.

 

Old-crop sales totaled 136,500 tonnes, within trade estimates of 75,000 to 150,000 tonnes.

 

In other export news, Japan bought 110,000 metric tonnes of wheat in a routine tender concluded Thursday for delivery sometime in July, an agriculture ministry official said. The tender included 45,000 tonnes of U.S. hard red winter wheat, 39,000 tonnes of U.S. dark northern spring wheat and 6,000 tonnes U.S. western white wheat.

 

Pakistani exporters, meanwhile, may have to cancel contracts for about 280,000 metric tonnes of wheat as the federal government has suspended wheat exports, a leading wheat exporter said Thursday. Pakistan's export ban, news of which spread Wednesday, is viewed as somewhat friendly as it takes some wheat off the world market, traders said.

 

Otherwise, there is not much else fresh news out, although concerns about dryness in the Ukraine remain supportive, traders said.

 

The weather was dry and hot in the country again Wednesday, with highs ranging from 88-95 Fahrenheit through the central and eastern areas, according to the DTN Meteorlogix. The central and east is expected to remain mostly dry during the next seven to 10 days, with hot, dry winds continuing for at least another three to five days, the weather firm said.

 

Ukraine is "bone dry," a CBOT floor broker said.

 

In central China, thunderstorms during the week will help replenish soil moisture for winter wheat. However, hot and dry weather is expected to redevelop within the next few days, according to Meteorlogix.

 

China's largest wheat producing region, Henan province, started harvesting its wheat crop Wednesday, the official People's Daily reported Thursday. Growing conditions were good for wheat this year, China's minister of agriculture was quoted as saying. However, weather conditions during the month-long harvesting season aren't expected to be favorable, the report said.

 

In Australia, drier weather will favor planting for a few more days, but showers are possible in the west during the weekend and Monday, Meteorlogix said.

 

In the U.S. Southern Plains, there are lingering concerns that heavy rains and stormy weather will delay harvest and could hurt winter wheat, traders said. Some flooding appears likely within some areas. Meteorlogix noted.

 

The bulls' next upside price objective is to close CBOT July prices above solid resistance at US$4.90. 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$4.79 and then at US$4.85. First support lies at Wednesday's low of US$4.72 1/2 and then at US$4.70.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is closing KCBT July wheat above solid chart resistance at US$4.85. The bears' next downside objective is closing prices below solid support at this week's low of US$4.62.

 

First resistance is seen at Wednesday's high of US$4.71 and then at US$4.75. First support is seen at Wednesday's low of US$4.67 and then at US$4.62.