November 25, 2005
 

US Wheat Outlook on Friday: Up 1 cent on e-CBOT, US HRW belt weather

 

 

U.S. wheat futures were called to open up 1 cent per bushel Friday following firm overnight trade after the recent break to new contract lows in Chicago Board of Trade wheat and 2-month lows in Kansas City and Minneapolis wheat, and on forecasts for mostly dry weather this weekend across droughty Texas and Oklahoma fields, brokers said.

 

Gains could be limited in Friday's shortened open outcry session as weekly U.S. wheat export sales, at 454,600 metric tonnes for the 2005-06 marketing year, met CBOT traders' expectations and trailed KCBT trader's estimates.

 

The sales were 19% below the previous week and 34% under the prior 4-week average. Prominent buyers included Japan (73,300 tonnes), Nigeria (64,100 tonnes, including 35,500 tonnes switched from unknown destinations), Pakistan (50,000 tonnes) and Venezuela (42,500 tonnes).

 

Overnight U.S. wheat export sales were quiet, while traders noted that Chinese wheat imports at 159,818 metric tonnes, were down 84% from last year.

 

Good Chinese buying last year of U.S. soft red winter wheat helped to underpin U.S. prices.

 

In global news, Philippine feed millers have bought 44,000 metric tonnes of wheat from China at US$143.50 a metric tonne, on a cost-and-freight basis, for arrival in February, sources said.

 

In the overnight e-CBOT session, March wheat at the CBOT closed up 1 1/4 cents at US$3.14. December ended up 1 cent at US$2.98 per bushel.

 

"It will take a close back above US$3.35 to provide the bulls with fresh upside technical momentum," a technical analyst said of CBOT March wheat. "First resistance is seen at US$3.15 - Wednesday's high - and then at US$3.20. First support lies at US$3.11 - the contract low - and then at US$3.08.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Friday; soft red winter wheat basis bids were also steady-firm; and spring wheat basis bids were mostly steady to weak, grain merchandisers said.

 

Wheat weather forecasts early Friday called for rains of 0.30 to 1.50 inches across central Kansas and central Nebraska on Sunday and Monday but mostly dry conditions in Texas and Oklahoma where rains are needed, according to Meteorlogix weather service.

 

Good rains of 0.50 to 1.50 inches were also expected in the U.S. Delta soft red winter wheat growing region late Saturday through Monday, a positive element for wheat fields there, the service noted.

 

In global wheat news, the European Union grain management committee granted export licenses for 28,000 metric tonnes of subsidized free-market wheat at a maximum refund of EUR5.00/tonne in its weekly tender Thursday.

 

The amount compares with 118,300 tonnes of wheat licenses granted at EUR5.00/tonne last week.

 

Friday is last trading day for Kansas City Board of Trade December wheat options, while traders in the three U.S. wheat markets continue to pare December positions ahead of the Nov. 30 first notice day for deliveries against the front month contract.

 

U.S. wheat futures markets close Friday at noon CST.