September 14, 2006

 

US Wheat Outlook on Thursday: Flat-up 1 cent on corn, bean calls, e-CBOT

 

 

U.S. wheat futures are expected to open steady to 1 cent a bushel higher Thursday as prices attempt to rebound a bit from recent declines and as wheat garners mild strength from expected firmer openings in corn and soybeans, sources said.

 

Wheat futures were also firmer in overnight e-cbot trade. Basis December contracts, Chicago Board of Trade wheat was 2 1/4 cents higher at US$3.99 3/4, Kansas City Board of Trade was 1 cent higher at US$4.67 and Minneapolis Grain Exchange was up 1 1/4 cents to US$4.45 3/4 a bushel.

 

Weekly export sales came in below the low end of most trade expectations, however, and may limit potential gains, a trader said.

 

Wheat export sales for the week ended Sept. 7 were a net 337,300 metric tonnes, 12% below the previous week and 16% under the previous four-week average. Shipments totaled 216,000 tonnes and were 66% below the previous week and down 53% from the previous four-week average.

 

The largest sales were made to Egypt with 60,000 tonnes, Taiwan at 51,000 tonnes, Yemen at 46,400 tonnes and Japan at 32,900 tonnes.

 

In other export news, Japan bought 116,000 tonnes of milling wheat, which included 55,000 tonnes of U.S., 20,000 tonnes of Canadian and 41,000 tonnes of Australian wheat.

 

Meanwhile, Strategie Grains on Thursday estimated that the 2006-07 E.U. soft wheat crop will be 5% lower than last year, down 0.69 million tonne. The downward revision is due to adverse weather in northern and eastern European countries.

 

India plans to boost its annual wheat output by 5-7 million tonnes, the agriculture secretary said Thursday. India's average wheat output is 70-73 million tonnes, but production in the crop year to June 2006 is estimated at just 69 million tonnes.

 

Because of the expected shortfall in wheat production, India will likely be the world's largest importer in terms of volume - the country is expected to import around 8.5 million tonnes of wheat in the current fiscal year ending March 31, 2007.

 

China may export more than 10,000 metric tonnes of wheat in the near term, an official at China Grain & Oils Information Center, a major government think tank, said Thursday. While the amount is modest, it could mark an upswing in the nation's exports. China in recent years has been building wheat stocks and hasn't exported much.

 

Western Australia state's winter wheat crop could plunge to 5.3 million tonnes this year, from 8.8 million tonnes last year, due to a dry winter. Nearly all the wheat in Western Australia is exported, so the production decline will affect export availability. Officials at logistics concern Cooperative Bulk Handling, however, said recent rains have helped the crop and there is potential for production to surprise to the upside.

 

Wheat Australia hopes to win a new Iraqi contract in an import tender being conducted by the Iraqi Grain Board. Delivery of a previous 350,000-tonne contract between the company and the grain board is now being finalized.

 

Technically, CBOT December wheat bears now have fresh downside momentum with the recent chart damage inflicted on the market, an analyst said. Bear's next objective will be to close prices below US$3.90 1/2. It would take a close above resistance at US$4.15, however, to give bulls fresh momentum.

 

Meanwhile, wheat deliveries at the Chicago Board of Trade totaled 507 on Thursday. Major stoppers included Banc of America stopping 260, Man Financial with 66 and Tenco with 172.

 

Deliveries at the Kansas City Board of Trade totaled 190, with ADM the sole stopper, while nine were posted at the Minneapolis Grain Exchange.