August 3, 2006

 

US Wheat Outlook on Thursday: Flat-up 1 cent on export sales, seasonals

 

 

Traders and analysts expect U.S. wheat futures to open steady to 1 cent a bushel higher Thursday on a slightly higher overnight trade, seasonal factors and on export sales that were above most trade expectations, sources said.

 

Expected lower openings in corn and soybeans, however, may limit wheat's gains.

 

In overnight trade basis September contracts, Chicago Board of Trade wheat was 1/2 cent higher at US$4.02, Kansas City Board of Trade was up 1 1/4 cents to US$4.86 1/2 and Minneapolis Grain Exchange was up 1 1/4 cents to US$4.74 1/2 a bushel.

 

Export sales for the week ended July 27 were a net 583,400 metric tonnes, a high for the marketing year. Sales were 26% above the previous week and 80% higher than the previous four-week average, the U.S. Department of Agriculture said.

 

Traders had expected sales to range from 350,000-550,000 tonnes.

 

Total shipments were 370,700 tonnes, down 30% from the previous week and 11% under the previous four-week average.

 

Export commitments for the 2006-07 marketing year now total 6.884 million tonnes, compared to 8.096 million at the same time last year, the USDA reported.

 

Analysts also pointed to seasonal factors as supporting prices, with some saying the market may have been trying to make seasonal lows this week and prices are bouncing off those lows on buy signals.

 

Meanwhile, mostly dry conditions are expected over the northern Plains Thursday and Friday, which should advance the speedy harvest of a drought-affected spring wheat crop. Northeastern areas may see showers and thunderstorms on Saturday and Sunday, however, according to private weather firm DTN Meteorlogix.

 

As expected, Japan bought 60,000 tonnes of U.S. wheat, 25,000 tonnes of Canadian and 63,000 tonnes of Australian wheat. The shipments are scheduled for arrival in Japan from Sept. 1-Oct. 31.

 

In other news, Ukraine expects 73% of this year's wheat harvest to be milling quality compared to 46% last year. The agriculture ministry had earlier forecast 60% of the crop would be milling quality.

 

Switzerland-based Agrico Trade & Finance FA submitted the lowest bid in a 400,000 metric tonne India wheat tender. Agrico offered 200,000 tonnes at US$210-US$212/tonne, an official said. Cargill Inc. reportedly offered the highest volume of wheat.

 

Technically, CBOT September wheat closed at over a one-week high Tuesday and climbed back above its major moving averages. It finds near-term support at US$3.93, then US$3.91 1/2 and last week's US$3.80 low.

 

September meets near-term resistance at US$4.03 1/2, then US$4.05-US$4.06 and the July 21 US$4.14 high.

 

KCBT September finds near-term technical support at the US$4.77 double-bottom low, then US$4.74 and US$4.71. Resistance is met US$4.87, US$4.91, US$4.94 and US$4.97.

 

MGE September finds support at US$4.65, US$4.58 and a gap that runs from US$4.57-US$4.55. It meets resistance at US$4.75, US$4.83-US$4.85 and US$4.87.