July 20, 2006

 

US Wheat Outlook on Thursday: Steady to firm start expected

 

 

U.S. wheat futures are expected to begin pit trading steady Thursday as ideas that recent market weakness was overdone and due for a bounce and continued hot, dry weather in U.S. spring wheat growing areas are expected to lend support at the opening, CBOT floor sources said.

 

In overnight trading at the Chicago Board of Trade, September wheat slipped 1/2 cent to US$3.92 1/2 cents per bushel, KCBT hard red wheat rose 3 cents to US$4.90, while at the Minneapolis Grain Exchange, September wheat ended up 2 cents at US$4.97 1/2.

 

Wheat should start out steady-to-firm, a commission house analyst said. The market was a little overdone to the downside Wednesday and it remains hot and dry in the spring wheat areas of the U.S. plains, he added. There could also be some spillover support from corn and soybeans this morning, he added.

 

Export sales were neat the high end of the range and both Minneapolis and Kansas City were modestly higher overnight, a floor trader said.

 

Mainly dry weather is expected in the U.S. Northern Plains over the next five days with the possibility of a few light showers on Monday, DTN Meteorologix Weather said. Temperatures early in the period are forecast above normal in much of the region and well above normal Sunday and Monday with highs in the middle 90's to low 100 degrees Fahrenheit.

 

In the 6-to-10 day outlook, temperatures are forecast above normal with rainfall near to below normal, DTN Meteorologix Weather said.

 

The U.S. Department of Agriculture reported that wheat export sales totaled 329,200 metric tonnes for the week ended July 13, within the range of 250,000-350,000 tonnes expected by analysts.

 

On technical charts, a close below Wednesday's low of US$4.08 in December CBOT wheat would provide the bears with better downside technical momentum, a market technician said. He sees first resistance at US$4.17, Wednesday's high and then at US$4.22 1/4. First support is pegged at US$4.08 and then at US$4.05.

 

In December KCBT wheat, first resistance is seen at US$5.03 1/2 and then at US$5.107 1/2. First support is seen at US$5.00 and then at US$4.91, Wednesday's low.

 

Cash wheat basis bids were mixed Thursday morning. Hard red winter wheat bids were mixed with Hutchinson, Kan. up 1 cent at 10 cents under Sep KCBT.

 

Spring wheat basis bids were unchanged to higher with Aberdeen, S.D. unchanged at 25 cents under Sep.

 

Soft red wheat bids were mostly unchanged with Evansville, Ind. unchanged at 65 cents under September.

 

In other wheat news, India has no plans to cut its import duty on wheat from 5%, the Indian Agricultural Minister said Thursday.

 

Philippine wheat imports could increase to one million metric tonnes in 2006, almost double the level in 2005, a feed milling official said Thursday. Import wheat is used as a substitute for corn used in the feed industry, sources said.

 

South Korean flour mills Dongah and CJ Corp. have jointly purchased 21,500 metric tonnes of U.S. No. 1 wheat in a tender concluded Thursday, a Seoul-based trader said.

 

Pakistan has decided not to export any surplus wheat this year to keep the price of the commodity stable in the domestic market, a senior government official said Thursday. According to government estimates, the country has a wheat surplus of over 1.5 million metric tonnes after a better-than-expected harvest. Another official at the Food and Agriculture Ministry said the government has decided to keep the surplus in its strategic reserves. The official noted that the government has rejected a ministry proposal to lift a two-year old ban on wheat exports because of concerns that it could have a negative impact on the domestic market.

 

Japan's Ministry of Agriculture, Forestry and Fisheries has bought 91,000 metric tonnes of wheat in a tender concluded Thursday, an agriculture ministry official said. Fifty thousand metric tonnes was of U.S. origin, with 20,000 tonnes sourced from Canada and 21,000 tonnes from Australia.