October 26, 2006

 

US Wheat Outlook on Thursday: 6-8 cents lower open seen on weak overnight

 

 

U.S. wheat futures are expected to start Thursday's day session lower on bearish momentum from a weaker overnight trade, sources said.

 

Benchmark Chicago Board of Trade December wheat is called to open 6-8 cents per bushel lower.

 

In e-cbot overnight trade, December wheat was 7 1/4 cents weaker at US$5.09 1/2.

 

Wednesday's day trading session closed lower on profit-taking pressure and that move may encourage bears somewhat Thursday, a technical analyst said.

 

The bulls' next upside price objective is to produce a close above strong resistance at the contract high of US$5.57 a bushel. The next downside price objective for the bears is closing prices below solid support at US$5.00 a bushel, the analyst said.

 

First resistance is seen at US$5.20 and then at US$5.25. First support lies at US$5.15 and then at US$5.10, he said.

 

Thursday morning, U.S. Department of Agriculture released its weekly export sales for the week ended Oct. 19, putting business at 460,800 metric tonnes. That was within analysts' expectations of 300,000 tonnes to 500,000 tonnes.

 

The sales were not predicted to affect day trading prices much. They came in 4% above the previous week but 4% under the prior 4-week average.

 

"It's a non-event," said Vic Lespinasse, a CBOT floor trader with A.G. Edwards & Sons.

 

In other news, Australia will have an exportable surplus of new-crop wheat despite a severe drought, an Australian grain company said. The surplus will supplement old-crop inventories to form a sizable export program, the company said.

 

ABB Grain Ltd. forecasted new crop wheat production this year in a range of 9 million to 11 million tonnes, the same range to which major wheat exporter AWB Ltd. downgraded Wednesday. That range compares with an actual 25 million tonnes last crop year.

 

With ongoing annual domestic demand of about 5.5 million tonnes, export availability will tighten sharply. But ABB's general manager said many industry participants believe more than 6 million tonnes of wheat was carried over from last harvest.

 

Australia's Bureau of Meteorology, meanwhile, said winter cropping areas in the southeast and southwest face the likelihood of average rainfall from November through January. Most of New South Wales and southern Queensland face drier-than-normal conditions, the bureau said.

 

DTN Meteorlogix adds there is some chance for beneficial moisture in the West Australia wheat belt during the next seven to eight days.

 

At the same time, most of eastern Australia faces hotter-than normal daytime and nighttime temperatures, an outlook that should dash any residual hopes of a soft finish to the winter cropping season, the bureau said.

 

Elsewhere, the Ukraine has seen rain ease dryness during the past couple days and may see more in the next week to 10 days, Meteorlogix said.

 

In Argentina, showers and thundershowers are expected through northern wheat areas during the next 3-5 days, the firm said. The southern wheat belt will see only a few light showers during this time.

 

In the U.S. Southern Plains, widespread rain is forecasted for Colorado and Kansas, Meteorlogix said.

 

Japan bought 77,000 metric tonnes of wheat in a routine tender concluded Thursday. It includes 20,000 tonnes of U.S. western white wheat and 20,000 tonnes of U.S. dark northern spring wheat, along with wheat from Australia and Canada.