October 31, 2005

 

US Wheat Outlook on Monday: Steady-Weak, Egypt wheat purchase eyed

  

 

U.S. wheat futures were called to open steady to weak Monday as technical support after Friday's losses are offset by disappointment that Egypt's weekend wheat purchase included Australian wheat, brokers said.

 

Egypt bought 60,000 tonnes of U.S. soft white wheat from Louis Dreyfus at US$133.70 per tonne and 60,000 tonnes of Australian hard wheat from the Australian Wheat Board, AWB, at US$171.70/tonne, according to Egypt's General Authority for Supply Commodities, or GASC.

 

In the overnight e-CBOT session, most-active December soft red winter wheat at the Chicago Board of Trade closed unchanged at US$3.17 3/4 after setting Friday a fresh 8 1/2-month low.

 

"Serious near-term chart damage occurred," noted Jim Wyckoff, a technical analyst. "A close below Friday's low would open the door to another leg down in prices in the near term. 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$3.20 and then at US$3.22 1/2. First support was put at US$3.15--the contract low--and then at US$3.10.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Monday morning, with a 15-cent increase in Hutchinson, Kan. and a 10-cent gain in Portland, Ore.; U.S. soft red winter wheat basis bids were mixed, with a 15-cent gain in Chicago and a 7-cent loss in Cincinnati; and spring wheat basis bids were steady to firm, with a 10-cent gain in Duluth, Minn., grain merchandisers said.

 

U.S. winter wheat growing weather remained generally favorable, with light rains falling across the U.S. Central Plains on Saturday and early Sunday.

 

The U.S. Department of Agriculture will update its winter wheat condition report late Monday, but traders said before the market's open that the data should have little impact on prices as the growing season was young.

 

The USDA last Monday reported the U.S. winter wheat crop was 57% in good to excellent shape, well behind last year's 76% in that condition.

 

Traders also continued to eye early harvest reports from key wheat exporters Australia and Argentina. The two countries are expected to more aggressively market their freshly harvested wheat in the coming weeks, a bearish factor for U.S. wheat prices.

 

In other global wheat news, Japan said it would tender Wednesday for 100,000 metric tonnes of wheat, including 60,000 tonnes of U.S. wheat.

 

However, India said wheat imports were unlikely in the coming months while China's Zhengzhou Grains Wholesale Market said it would sell 447,000 metric tonnes of old wheat on Friday.