July 27, 2006

 

US Wheat Outlook on Thursday: Up 1-2 cents on export sales, fresh inputs

 

U.S. Wheat futures are expected to begin open auction trading 1-2 cents higher Thursday following better than expected weekly export sales and news of export sales to Egypt, sources said.

 

In overnight trading at the Chicago Board of Trade, September wheat gained 2 1/4 cents to US$3.84 1/2 per bushel, KCBT Sep hard red wheat slipped 2 cents to US$4.80, and at the Minneapolis Grain Exchange, September wheat rose 1/4 cent to US$4.76.

 

Export sales were stronger than expected, Egypt bought some wheat, and India is tendering for 400,000 tonnes of optional origin wheat, all of which is supportive, a floor analyst said. In addition, the Australian Wheat Board cut its estimate of Australia's crop he added.

 

The U.S. Department of Agriculture reported weekly US wheat export sales totaled 464,700 metric tonnes for the week ended July 20, above the 300,000-400,000 metric tonnes expected by analysts.

 

Egypt's General Authority for Supply Commodities or GASC, purchased 285,000 metric tonnes of U.S. and Canadian wheat Thursday. GASC bought 60,000 metric tonnes of U.S. soft white wheat, 55,000 tonnes of U.S. soft red winter wheat, and 170,000 tonnes of soft Canadian wheat, a GASC official said.

 

India's government-run State Trading Corp. has tendered to purchase 400,000 metric tonnes of optional origin wheat at zero duty, a company official said Thursday. The wheat is to be delivered in September and October and can be from either the 2005-06 crop of 2006-07 or both from the country of origin, according to the tender document.

 

Below average rainfall is likely to reduce Australia's wheat crop to 18-20 million metric tonnes, down from an earlier estimate of 23-25 million, the Australian Wheat Board AWB, said Thursday.

 

The second day of the spring wheat tour found yield losses due to extended heat and dryness across North Dakota, tour participants said. Tour participants estimated yields in fields surveyed Wednesday to average 29.5 bushels per acre.

 

On technical charts, some near-term technical damage was seen as prices dropped below last week's "reaction low," a technical analyst said. The next downside price objective for the bears is closing prices below major psychological support at US$4.00 per bushel in December. It will take a close back above solid technical resistance at US$4.25 to provide the bulls with fresh upside technical momentum. First resistance is seen at US$4.08 and then at Wednesday's high of US$4.13. First support is pegged at US$4.03 1/2 and then at US$4.00.

 

December KCBT ended solidly lower Wednesday and at its lowest closing level in four weeks. The bears' next downside objective is closing prices below support at this month's low of US$4.91, the analyst said. First resistance is seen at US$5.00 and then at US$5.05, with first support seen at US$4.94 and then at US$4.91.

 

Cash wheat basis bids were unchanged to mostly higher Thursday morning. Hard red wheat basis bids were unchanged to higher with Hutchinson, Kansas up 1 cent at 9 cents under September.

 

Spring wheat bids were mixed with Minot, N.D. down 1 cent at 64 cents under September.

 

Soft red winter wheat bids were unchanged to higher with Cincinnati, Ohio up 1 cent at 74 cents under the September.

 

In other wheat news, Japan's Ministry of Agriculture, Forestry and Fisheries bought 106,000 metric tonnes of wheat in a tender concluded Thursday, a ministry official said. Included in the total was 41,000 tonnes from the U.S., consisting of 21,000 tonnes hard red winter ad 20,000 tonnes of Dark Northern Spring.