June 2, 2006

 

US Wheat Outlook on Friday: Up 1-3 cents on e-CBOT, export news

  

 

U.S. wheat futures were called to open up 1-3 cents per bushel Friday following firm overnight trade in a consolidation from this week's break to a 3-week low in CBOT wheat, brokers said.

 

News that India bought 1.2 million tonnes of wheat and that it planned to float more tenders for up to 3.5 million tonnes of wheat this year were supportive, one broker noted.

 

Gains in gold and a weaker dollar were also expected to underpin wheat futures, brokers added.

 

The U.S. Department of Agriculture reported weekly U.S. wheat export sales totaled 352,300 tonnes, just above traders' estimates for 150,000 to 350,000 tonnes.

 

Traders also noted that Informa Economics released Friday estimates for U.S. 2006 wheat production. Total U.S. 2006 wheat production was seen at 1.3 billion bushels, hard red winter wheat production was seen at 700 million, soft red winter wheat was seen at 354 million bushels and soft white was seen at 264 million bushels.

 

Informa Economics officials had no comment.

 

Those figures compared with Informa's estimates on May 5 of 2006-07 U.S. winter wheat production at 1.298 billion bushels, hard red winter wheat production of 690 million bushels, soft red winter wheat of 358 million bushels, and soft white of 251 million bushels, traders noted.

 

In the overnight e-CBOT session, most-active July wheat closed up 3 cents at US$3.95 per bushel.

 

"Bears have gained downside technical momentum this week," a technical source said. "The next downside price objective is solid technical support at the April high of US$3.82. This week's price action was the strongest clue so far that a near-term market top is in place. It will take a close back above resistance at US$4.11 to provide the bulls with fresh upside technical momentum."

 

First resistance for CBOT July wheat was seen at US$3.98 - Thursday's high - and then at US$4.00. First support lies at US$3.89 - Thursday's low - and then at US$3.85.

 

Kansas City Board of Trade July wheat ended overnight up 1 cent at US$4.84 1/2 per bushel.

 

"A weekly low close on Friday would more strongly suggest that a market top is in place," a technical source said. "Look for higher volatility in the near term. A close below support at US$4.70 would also provide the bears with some better downside technical momentum. It will take a close back above major psychological resistance at US$5.00 a bushel to revive the bulls."

 

First resistance for KCBT July wheat seen at US$4.91 and then at US$4.95. First support is seen at US$4.81 - Thursday's low - and then at US$4.75.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Friday; soft red winter wheat basis bids were also steady to firm, with 10-cents gains in Cincinnati and Memphis; and spring wheat basis bids were steady to firm, grain merchandisers said.

 

Fair weekend harvest weather was forecast for the U.S. Plains following this week's rains, brokers said.