July 30, 2009

 

US Wheat Outlook on Thursday: Higher on solid exports, outside support

 

 

U.S. wheat futures are poised to climb on Thursday's open on outside market support and solid export sales in a bounce from Wednesday losses, analysts said.

 

Chicago Board of Trade wheat is called 5 to 7 cents higher. In overnight trade, September CBOT wheat was up 6 1/2 cents to US$5.18 per bushel and December wheat was up 5 1/2 cents to US$5.44 1/2.

 

Although both CBOT and Kansas City wheat set new lows Wednesday, the markets firmed up after that. A floor trader said the market is already considered oversold and that funds are not heavy sellers.

 

"It doesn't seem like they've been really eager to press us," a trader said.

 

Weekly export sales were strong, analysts said. The U.S. Department of Agriculture on Thursday morning reported sales of 575,000, up from 342,300 metric tonnes the previous week. The trade had expected sales between 200,000 and 500,000 metric tonnes.

 

The sales total is a bright spot amid what has been a bleak demand picture.

 

"One robin doesn't make a spring, but at least we've got one week of decent sales," said Larry Glenn, broker and analyst for Frontier Ag.

 

He noted that the report showed 24 countries bought U.S. wheat during the week.

 

"That's a higher number than normal, so I think that's positive," Glenn said.

 

In other export news, Japan's Ministry of Agriculture, Forestry and Fisheries bought 144,000 metric tonnes of wheat in a tender concluded Thursday, an agriculture ministry official said. Of that, 102,000 metric tonnes was of U.S. origin.

 

Outside markets appear slightly supportive Thursday, a trader said, with a weaker dollar and higher crude oil offering support. The trader also noted that the end of hearings in Washington on possible speculative limits in the crude oil market should remove some of this week's pressure on the wheat market.

 

There are few supply concerns, however, with good-looking U.S. crops and only minor problems around the world.

 

An annual U.S. spring wheat tour found more fields with strong yield potential Wednesday, but producers are nervous about the possibility that weather could hurt the immature crop before harvest.

 

Based on surveys of 149 fields, the average calculated yield for hard red spring wheat was 44.6 bushels per acre, up from 34.4 bushels last year. Scouts checked 28 durum fields and calculated an average yield of 35.4 bushels, up from 23.3 bushels last year.

 

The next downside price objective for the bears is pushing and closing December prices below major psychological support at US$5.00, a technical analyst said. The next upside price objective is to push and close July futures prices above solid technical resistance at the July high of US$5.80 a bushel.

 

First resistance is seen at Wednesday's high of US$5.45 1/2 and then at this week's high of US$5.55 1/2. First support lies at Wednesday's low of US$5.32 3/4 and then at US$5.25.