August 10, 2006

 

US Wheat Outlook on Thursday: Steady-weak on overnight losses

 

 

U.S. wheat futures are called to open steady to weaker Thursday, following slight losses on the Chicago Board of Trade overnight, although analysts said losses could be limited as traders square position ahead of Friday's government production data.

 

Benchmark CBOT September wheat is called to open steady to 1 cent a bushel lower.

 

In e-cbot overnight trade, September wheat was down 1/4 cent at US$3.87 3/4 a bushel and December wheat fell 1 cent to US$4.08 1/4.

 

"I think we'll be like yesterday, where we were lower, but found support. People are anticipating lower production," in Friday's government data, said Sid Love, analyst at Kropf and Love Consulting.

 

The U.S. Department of Agriculture is scheduled to release its August crop production report on Friday. A survey of trade estimates by Dow Jones Newswires shows the all wheat figure at 1.765 billion bushels, down from the July figure of 1.806 billion. All winter is estimated at 1.284 billion bushels, up modestly from July's 1.280 billion.

 

Other spring wheat is estimated at 428 million bushels, down from July's figure of 465 million. The durum crop is seen at 56 million bushels, down slightly from the July estimate of 60 million. New-crop wheat carryout is estimated at 408 million bushels, down slightly from the July estimate of 438 million bushels.

 

"We're looking for some support from the supply/demand figures, but there's a two-thirds chance it could be negative as neutral is negative when you're at prices this high.

 

"It's likely we'll see our production and stocks down, world production is likely to be down with cuts to Canadian and Australian production and maybe a trim to the European Union. All that together should give us support," Love said.

 

The USDA released its weekly export sales Thursday, with 395,600 metric tonnes sold, versus expectations for sales of 350,000 to 550,000 tonnes. USDA said these sales were 32% below the previous week and equal to the prior 4-week average. Top buyers were Thailand, Japan and the Philippines. These sales were partially offset a decrease of 11,200 tonnes for unknown destinations. Exports of 556,400 tonnes were a marketing-year high and 50% above the previous week and 35% over the prior 4-week average.

 

"The weekly data showed high shipments, so our sales aren't bad. The thing about wheat is it's not cheap. It's at the upper end of where it's ever been," he said.

 

DTN Meteorlogix weather said generally favorable conditions for the harvest of the drought reduced crop in the North Plains. Rain on Sunday will cause some disruptions before favorable harvest weather returns the first half of next week.

 

Weather in the corn belt is generally beneficial to corn and soybean crop development, they added.

 

Other export news is largely routine, analysts said.

 

Ukraine's state reserve Wednesday purchased 27,000 metric tonnes of wheat at an auction in Kiev, according to the reserve's press office. The state reserve plans altogether to buy 400,000 tonnes of 2006 grain.

 

Japan's Ministry of Agriculture, Forestry and Fisheries has bought 115,000 tonnes of wheat in a tender concluded on Thursday, an agriculture ministry official said, with the U.S. garnering 60,000 tonnes of the business.

 

Three South Korean flour mills jointly bought 23,200 metric tonnes of U.S. No. 1 wheat for an arrival in South Korea between Oct. 10-Nov. 10. Another South Korean flour mill bought 18,000 tonnes of U.S. wheat for an arrival in South Korea Sept. 20 to Oct. 20

 

A technical analyst put first resistance for CBOT December wheat at US$4.10 1/2 and then at US$4.15 1/2, this week's high. First support lies at US$4.04 and then at US$4.00.