August 17, 2006

 

US Wheat Outlook on Thursday: Steady to up 1 cent on e-CBOT, corn, soy

 

 

U.S. wheat futures are called to open steady to firmer on Thursday, supported by strength in the Chicago Board of Trade's e-cbot overnight trade and likely spillover support from firmer calls in corn and soybean markets.

 

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

 

In e-cbot overnight trade, September wheat was up 2 1/2 cents at US$3.74 bushel and December wheat rose 2 1/4 cent to US$3.93 3/4.

 

U.S. Department of Agriculture said weekly export sales for wheat in the week ended Aug. 10 were 387,700 metric tonnes. Trade estimates ranged from 300,000 to 500,000 tonnes. Sales were 2% below the previous week and 13% under the prior four-week average. The biggest buyer was Japan at 122,500 tonnes. The sales were partially offset 132,300 tonnes of cancellations.

 

"The export sales are disappointing. We were in a price area where we had done some export business before. That might explain why we've been a little on the weak side," said John Kleist of Kleist Agriculture Consulting. "The market might have to find where demand is now."

 

However, with expected strength in corn and soybeans, and with ideas the wheat market might rebound after Tuesday's sell-off into the close, analysts are still calling the wheat market firmer. "We have to give wheat a little bit of room," an analyst said.

 

Egypt bought 60,000 tonnes of U.S. soft white winter wheat for September delivery. It decided to cancel a tender for 50,000 tonnes of wheat. "It's helpful, but it's not really bullish," Kleist said.

 

India's state-run trading house MMTC Ltd. said it received three bids from international companies for a tender to import up to 120,000 metric tonnes of wheat, a senior company official said Thursday.

 

Morocco's state wheat buyer, the Office National Interprofessional des Cereales et des Legumineuses, or ONICL, confirmed late Wednesday it bought 20,000 metric tonnes of U.S. soft wheat for late September delivery.

 

DTN Meteorlogix weather firm said in the North Plains thunderstorms are possible through much of the region Thursday and through central and east areas during Friday, but turning dry by Saturday.

 

In the Southern Plains, episodes of scattered showers and thundershowers will tend to favor the north, central and southwest during the next few days.

 

The forecast for Argentina's wheat areas remains largely unchanged with only a few light showers in the east during the next seven days and possibly very cool at times.

 

When CBOT December wheat closed near the session low on Wednesday the contract scored a bearish "outside day" down on the daily bar chart and hit a fresh 3 1/2-month low close. Bulls will need a close back above psychological resistance at US$4.00 to begin to get some fresh upside technical momentum. The next downside price objective for the bears is closing prices below solid support at this week's low of US$3.89 1/2 a bushel. First resistance is seen at US$3.93 and then at US$4.00. First support lies at US$3.89 1/2 and then at US$3.85.

 

In supply news, Strategie Grains lowered its estimate of 2006-07 European Union cereal production in its monthly report Thursday to 249.0 million metric tonnes, which is down 10.5 million from its July forecast and a drop of 3% from last year's crop.

 

"This news is friendly, but we had an E.U. rally in July because of the heat there. A lot of that has been discounted," Kleist said.

 

Germany's 2006 grain crop harvests will be lower on year as late summer heavy rains are set to delay the harvest, Germany's farmers association said in its third harvest report Thursday. The Deutscher Bauernverband, or DBV, association estimated the Germany-wide grain crop to amount to 40.7 million metric tonnes, around 11.5% lower than in 2005.

 

Ukraine harvested 27 million metric tonnes of grain to Aug. 16 on 10.62 million hectares, which is 87% of the total area to be harvested, with an average yield of 2.55 tonnes a hectare, the agriculture ministry said. This was down slightly on the year-earlier period, when Ukraine harvested 30 million tonnes of grain with an average yield of 2.69 tonnes/hectare.

 

Farmers in the Canadian prairies will not have to worry about an early frost damaging their crops in 2006, weather experts said. Although overnight temperatures in parts of Alberta near Edmonton reached lows of 3 degrees Celsius, temperatures will be slightly above normal heading into next week, according to Environment Canada.