July 24, 2008

 

US Wheat Outlook on Thursday: Seen 5-7 cents up on rebound, short-covering

 

 

U.S. wheat futures are poised to rise at the start of Thursday's day session as the markets rebound from recent losses along with corn and soybeans.

 

Chicago Board of Trade September wheat is called to open 5 to 7 cents per bushel higher. In overnight electronic trading, CBOT September wheat climbed 6 3/4 cents to US$7.90, and CBOT December wheat rose 6 3/4 cents to US$8.13 1/2.

 

Wheat is in a technically oversold condition and could see support from some short-covering, analysts said. Non-commercial speculative funds were net short 35,718 contracts in CBOT wheat as of July 15, the Commodity Futures Trading Commission said in its most recent supplemental Commitments of Traders report.

 

CBOT corn and soybeans were firmer overnight and should provide some upside support to wheat, a trader said. Wheat has been looking to corn for direction lately, as both grains are used for animal feed.

 

Weekly U.S. wheat export sales of 610,400 metric tonnes were seen as solid and toward the high end of analysts' estimates, which ranged from 400,000 to 750,000 tonnes. Top buyers for the week ended July 17 included Mexico, which took 153,200 tonnes; Egypt, which bought 114,700 tonnes; and Sri Lanka, which bought 55,000 tonnes.

 

Otherwise, there is little fresh fundamental news out for wheat, traders said. The markets will "continue to flop around" in relatively thin volume, a CBOT Floor trader said.

 

"There's nothing to get excited about," he said.

 

Rain seen through wheat areas of Queensland in Australia will help to improve the condition of crops in this area, DTN Meteorlogix said. Major Argentine wheat areas of La Pampa and southwest Buenos Aires, meanwhile, are in need of rain to recharge soil moisture, although no "significant rain" is in the forecast for the next five to seven days, the private weather firm said.

 

Liffe's Paris wheat futures were higher Thursday in a technical rebound after dropping about EUR20/tonne in the past month. Harvest pressure and weakness in CBOT grains spurred recent downtrend.

 

CBOT December wheat Wednesday closed lower and hit a fresh six-week low. Bears still have the near-term technical advantage, a technical analyst said.

 

The next downside price objective for the bears is pushing and closing prices below solid technical support at US$7.68, the analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at US$8.50 a bushel.

 

First resistance is seen at this week's high of US$8.26 1/2 and then at US$8.40. First support lies at Wednesday's low of US$7.98 and then at US$7.82 3/4.

 

In other news, Ukraine harvested 16.58 million metric tonnes of grain on 5.2 million hectares, with the average yield of 3.26 tonnes a hectare in the year to July 23, the agriculture ministry said. The ministry said the pace of harvesting was somewhat slower than last year but the yields were considerably higher at 3.26 tonnes a hectare compared with 1.84 tonnes a hectare at the same time last year.