November 4, 2005

 

US Wheat Outlook on Friday: Up 1/2 to 3 cents on Iraq purchase

  

 

U.S. wheat futures were called to open up 1/2 cent to 3 cents per bushel Friday after the U.S. Department of Agriculture reported the sale of 800,000 metric tonnes of U.S. hard red winter wheat to Iraq, brokers said.

 

The sale amount had been rumored Wednesday, and late commercial buying and local short-covering boosted Kansas City Board of Trade HRW wheat futures late Thursday. Those gains in turn sparked a late bounce in Chicago Board of Trade soft red winter wheat futures after nearby December made a new contract low.

 

In the overnight e-CBOT session, CBOT December wheat closed up 1 3/4 cents at US$3.15 after closing Thursday near the session high.

 

"The bears are still in near-term technical control but the market is still overdone on the downside, technically, and due for more of a corrective upside bounce soon," said Jim Wyckoff, a technical analyst. "It will take a close back above US$3.30 to provide the bulls with a bit of fresh upside momentum."

 

The 9-day relative strength index for CBOT December stood at 31 before Friday's open, just above the oversold benchmark of 30. First resistance was seen at US$3.15 and then at US$3.17 1/4. First support was put at US$3.10 - the contract low - and then at US$3.08.

 

Cash U.S. hard red winter wheat basis bids were mostly steady to weak Friday; soft red winter wheat basis bids were steady to firm, with an 11-1/2 cent gain in Cincinnati and a 14-cent gain in St. Louis; and spring wheat basis bids were steady to firm, with a 10-cent gain in Minneapolis rail bids, grain merchandisers said.

 

Forecasts called for dry weekend weather across the U.S. Southern Plains HRW belt and light rains early in the week, a favorable outlook for crop development, forecasters said.

 

In other overnight U.S. wheat export news, the USDA's CCC bought 13,000 metric tonnes of hard red winter wheat for Bolivia.

 

In global wheat news, Ukraine wheat exports during October rose to 1.618 million metric tonnes from 1.339 million tonnes in September, according to Ukraine's association of agrarian exchanges.

 

In Asia, China's Henan province planned to sell nearly 1 million metric tonnes of old wheat reserves Saturday, an auctioneer source said. The wheat was produced between 1998 and 2003, with the majority of it grow around 2000, the source said.

 

Zhengzhou Grains Wholesale Market sold around 250,000 metric tonnes of imported wheat. The grain had been mostly imported from Canada in 1999-2001 and stored as state reserves in the coastal provinces of Liaoning, Shandong, Jiangsu and Guangdong, sources said.