October 28, 2005

 

US Wheat Outlook on Friday: Flat-Up 1 cent on follow-through buying

 

 

U.S. wheat futures were called to open flat to up 1 cent a bushel Friday on follow-through buying after a firm overnight close and on belief that Iraq bought 1 million metric tonnes of U.S. wheat, presumably hard red winter wheat, this week, brokers said.

 

News reports from Baghdad on Wednesday, quoting a senior Iraqi trade official, that Iraq had bought 1 million tonnes of U.S. wheat for early December arrival have underpinned U.S. wheat futures. The U.S. Department of Agriculture hasn't confirmed the sale.

 

Such a sale would presumably result in tighter U.S. hard red winter wheat ending stocks, brokers noted.

 

In the overnight e-CBOT session, most-active December wheat at the Chicago Board of Trade closed up 1 cent at $3.25 1/2 after setting a five-week low Thursday and then closing higher, near the session's mid-range.

 

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

 

First resistance for CBOT December wheat is seen at $3.26 1/2 - Thursday's high - and then at $3.29 1/2 - this week's high, Wyckoff added. First support lies at $3.22 - Thursday's low - and then at $3.20.

 

Cash U.S. hard red winter wheat basis bids were mixed; soft red winter wheat basis bids were also mixed, with a 4-cent drop in Cincinnati and a 5-cent gain in Louisville; and spring wheat basis bids were steady to firm, grain merchandisers said.

 

Traders noted U.S. winter wheat forecasts called for light rains early next week and then dry conditions. The USDA reported Monday that crop conditions lagged last year's pace, but forecasters on Thursday noted this week's rains could underpin that rating.

 

Overnight U.S. wheat export sales were quiet.

 

In global wheat news, India said it will not import wheat due to adequate stocks; and China noted that its September wheat imports were down 90% from last year's imports.