November 10, 2005

 

US Wheat Outlook on Thursday: Down 1-3 cents following weak corn, soy calls

 

 

U.S. wheat futures were called to open down 1 cent to 3 cents Thursday, despite mostly neutral U.S. Department of Agriculture 2005-06 ending stocks data, following calls for a 5-7 cent lower CBOT soybean open, brokers said.

 

In the overnight e-CBOT session, most-active December wheat at the Chicago Board of Trade closed up 1 3/4 cents at US$3.16 3/4 after closing near mid-range Wednesday on more short covering in a bear market.

 

"The bears are still in firm near-term technical control," 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."

 

First resistance for CBOT December wheat was seen at US$3.17 1/2 - Wednesday's high - and then at US$3.20. First support was put at US$3.12 - Wednesday's low - and then at US$3.10, Wyckoff said.

 

In Thursday's monthly report, the USDA forecast 2005-06 U.S. wheat ending stocks at 530 million bushels, just below analysts' average estimate of 533 million bushels.

 

A USDA wheat specialist told Dow Jones Newswires that U.S. wheat class breakdowns were not typically available for the November crop report; last year's report was unusual and due to the delayed wheat harvest. No wheat class breakdown was released in 2002 and 2003, sources noted.

 

World wheat ending stocks for 2005-06 were seen at 139.5 million tonnes, above the October estimate of 137.4 million but below last year's estimated 149.18 million tonnes.

 

Cash U.S. hard red winter wheat basis bids were steady to mixed; soft red winter wheat basis bids were steady to weak; and spring wheat basis bids were steady to weak, with a 5-cent loss in spot Minneapolis rail bids, grain merchandisers said.

 

Traders also continued to eye reports of dry conditions in Texas and the southern U.S. HRW wheat belt.

 

U.S. wheat export news was supportive, brokers said.

 

The USDA reported weekly U.S. wheat export sales totaled 1.397 million metric tonnes, dominated by last week's announced sale of 800,000 metric tonnes of U.S. hard red winter wheat to Iraq. The sales met analysts' estimates.

 

In overnight news, Japan bought 86,000 tonnes of U.S. wheat in an overall tender for 142,000 tonnes. The USDA's CCC bought 12,000 tonnes of northern spring wheat for Lebanon and Jordan postponed its tender for 100,000 tonnes following Wednesday's bombings.

 

In global news, a spokesman for consultancy Australian Wheat Forecasters Pty. Ltd., forecast Australia's crop at 24.5 million metric tonnes, toward the upper end of a 23 million to 25 million estimated range favored by wheat exporter AWB Ltd. (AWB.AU) and Commonwealth Bank of Australia.

 

Strategie Grains, a monthly publication, said the differential between E.U and Black Sea wheat prices continues to narrow, with E.U wheat gaining competitiveness.