November 29, 2007

 

US Wheat Outlook on Thursday: Up on follow-through, solid export sales

 

 

Follow-through buying and solid export sales are expected to push U.S. wheat futures higher at the start of Thursday's day session, analysts said.

 

Chicago Board of Trade March wheat is called to open 4 to 8 cents per bushel higher. In e-cbot overnight trading, CBOT March wheat rose 5 1/2 cents to US$8.87 1/4.

 

Carryover buying from the overnight and from Wednesday should continue to support prices in early activity, an analyst said. Several contracts on Wednesday finished limit up, 30 cents higher, as Argentina announced it was closing its wheat export registry for five days while the government assess potential damage from recent frosts.

 

"Bulls have solid upside near-term technical momentum," a technical analyst said.

 

The strong rally Wednesday probably priced in most of the trade's concerns about global tightness, an analyst said. The rally looks as though it was overdone, and the market could now see some pressure from profit-taking, traders said.

 

"Limit higher moves at all three exchanges were probably overdone, leaving this market vulnerable to a setback near-term," Farm Futures analyst Arlan Suderman said.

 

The bulls' next upside price objective is to push and close CBOT March wheat above solid technical resistance at US$9.00, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at Wednesday's low of US$8.50. First resistance is seen at US$8.93 and then at US$9.00. First support lies at US$8.70 and then at US$8.60.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is pushing and closing prices above solid resistance at US$9.00, the technical analyst said. The bears' next downside objective is closing prices below solid technical support at Wednesday's low of US$8.65. First resistance is seen at US$9.00 and then at US$9.10. First support is seen at US$8.90 and then at US$8.80.

 

Weekly U.S. wheat export sales are seen as bullish, a CBOT floor trader said. The U.S. Department of Agriculture said total sales for the week ended Nov. 22 were 498,000 metric tonnes, at the high end of trade expectations.

 

Sales of 2007-08 wheat were 407,500 tonnes. The top buyers included Pakistan, which took 100,000 tonnes, and Japan, which took 89,700 tonnes. Sales of 2008-09 wheat were 90,500 tonnes, according to the USDA. Unknown destinations bought 81,500 tonnes.

 

In other export news, Pakistan plans to import 200,000 metric tonnes of wheat to boost domestic supplies and keep prices of the commodity in check, a government official said. International suppliers have until Dec. 8 to submit their bids to supply wheat to Pakistan, the official said.

 

Traders have been talking about the potential for business with Pakistan for several days, so the news isn't surprising, a CBOT floor trader said. However, a purchase would still be supportive as world stocks are tight, he said.

 

Three South Korean flour mills, meanwhile, bought 24,000 metric tonnes of U.S. No.1 wheat from trading house Cargill in a tender concluded late Wednesday, a trader in Seoul said. The shipment is expected to reach South Korea between Feb. 25 and March 25.

 

China will sell more wheat it bought under the minimum purchase price program next week to meet market demand, according to the China National Grain & Oil Trade Center. The country plans to auction 3.5 million tonnes of wheat Wednesday, which is 1 million more than the amount it planned to sell this week, and to sell 200,000 tonnes of imported wheat from its reserves.