October 27, 2005

 

US Wheat Outlook on Thursday: Mixed, disappointing exports vs e-CBOT

 

 

U.S. wheat futures were called to open mixed Thursday as disappointing weekly U.S. wheat export sales data may be tempered by overnight e-cbot gains, brokers said.

 

U.S. wheat export sales for the week ended Oct. 20 totaled 379,400 metric tonnes, led by sales of hard red spring wheat and white wheat, according to the U.S. Department of Agriculture The sales were 4% below the previous week and 17% under the prior 4-week average.

 

Overnight U.S. wheat export sales were slow and there was no confirmation early Thursday from the USDA as to Wednesday's reported sale of 1 million metric tonnes of U.S. wheat to Iraq. The sale had been expected and priced into higher protein Kansas City and Minneapolis Grain Exchange futures, brokers said.

 

Looking ahead, wheat traders noted Japan was expected to tender Thursday for 85,000 tonnes of wheat, including 65,000 tonnes of U.S. wheat.

 

Jordan was also expected to tender for 100,000 tonnes of wheat Nov. 10, but U.S. wheat analysts weren't enthusiastic about U.S. chances in securing that sale.

 

In the overnight e-CBOT session, most-active December wheat at the Chicago Board of Trade closed up 1 3/4 cents at US$3.25 1/4 per bushel.

 

"Bears still have downside technical momentum," said Jim Wyckoff, a technical analyst. "A retest of the late-August low of US$3.16 1/2 is still likely. It will take a close back above US$3.40 to provide the bulls with fresh upside momentum."

 

First resistance for CBOT December wheat was seen at US$3.26 and then at US$3.29 - Wednesday's high. First support was put at US$3.22 1/2 - this week's low - and then at US$3.20.

 

Traders noted forecasts for near-term dry, warm U.S. hard red winter wheat weather, a supportive element for U.S. wheat prices following this week's USDA report that early crop conditions lagged last year's. However, they also noted the U.S. winter wheat crop year remained young.

 

In global wheat news, the London-based International Grains Council on Thursday forecast 2005 global wheat production at 609.3 million metric tonnes, down from its September estimate of 609.4 million and well below last year's 623.2 million metric tonnes.