November 23, 2007

 

US Wheat Outlook on Friday: 2-3 cents higher on e-CBOT, weekly export sales

 

 

U.S. wheat futures are expected to begin trading 2 to 3 cents higher Friday, underpinned by the steady tone in overnight activity and weekly export sales near the high end of analyst estimates, an analyst said.

 

In overnight electronic trading, CBOT March wheat rose 1 1/2 cents to US$8.27 1/2 per bushel while March Kansas City Board of Trade hard red wheat slipped 1 cent to US$8.44 1/4.

 

The market should trade higher as export sales were near the top end of estimates and there was news that India bought 342,000 metric tonnes of optional origin wheat, a commission house analyst said.

 

The U.S. Department of Agriculture reported that U.S. weekly export sales were 510,500 metric tonnes for the week ended Nov. 15. Included in the total were sales of 18,700 tonnes for delivery in the 2008-09 crop year. Analysts had expected sales between 300,000 and 500,000 metric tonnes. Mexico was the largest buyer on the week.

 

Although the Indian purchase is not expected to include any amount from the U.S., it is positive as it underscores world wheat demand, a trader said. And although it is early in the growing season, continued concern about dryness in the U.S. central plains is also expected to underpin values, the trader said.

 

In the U.S. hard red winter wheat belt, there is a chance for some light precipitation, up to 0.25 inch melted in southwest areas Friday, DTN Meteorlogix Weather said. Precipitation of 0.25 to 0.75 inch is possible through parts of Texas and south and east Oklahoma during the weekend with little other precipitation expected in the region. Temperatures are expected to average near to below-normal for the weekend.

 

On daily open auction technical charts, CBOT March wheat closed limit-up and hit a fresh two-week high on speculative buying and short covering, a technical analyst said. A seven-week-old downtrend line in the daily bar chart was eclipsed Wednesday on ideas that world demand will increase with prices down around US$2 per bushel from their earlier levels, the analyst said. The bull's next upside price objective is closing prices in March above solid resistance at US$8.50 per bushel. The next downside price objective remains closing prices below solid support at US$8.00 per bushel.

 

First resistance is seen at US$8.40 and then at US$8.50. First support is seen at US$8.15 and then at US$8.00.

 

March KCBT wheat settled near the session high and hit a three-week high Wednesday. The bulls have technical momentum on their side and their next upside price objective is closing prices above resistance at US$8.75 per bushel. The bears' next downside price objective is closing prices below solid support at US$8.00.

 

First resistance is seen at US$8.46, and then at US$8.50. First support is noted at US$8.32 1/2 and then at US$8.26.

 

In other wheat news, Argentina raised its forecast of 2007-08 wheat production to 15.4 million metric tonnes from an estimate of 14.5 million to 15.3 million earlier this month, the Agriculture Secretariat said Thursday.

 

U.S. wheat exchanges will trade an abbreviated session Friday, closing at 1 p.m. EST.