November 30, 2005

 

US Wheat Outlook on Wednesday: Steady-Up on technicals, Iraq wheat buy

 

 

U.S. wheat futures were called to open steady to up 1 cent per bushel Wednesday on follow-through technical buying in Kansas City Board of Trade wheat and news Iraq bought 200,000 metric tonnes of 2005-06 U.S. hard red winter wheat, brokers said.

 

The sales were rumored Tuesday, with traders noting that the U.S. HRW wheat balance sheet remained very tight even without new sales.

 

There were 2,422 delivery notices posted against CBOT December wheat on Wednesday first notice day, matching estimates and outlining the slow demand for U.S. soft red winter wheat.

 

There were 400 lots posted against KCBT December wheat and no deliveries were posted against higher MGE December wheat amid strong demand in the cash market, a supportive factor.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1/4 cent at US$3.16 1/2 and December ended down 1/4 cent at US$3.00 1/4.

 

First resistance for CBOT March was seen at US$3.18--Tuesday's high--and then at US$3.20. First support was seen at US$3.13 1/2--Tuesday's low--and then at US$3.10--the contract low.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Wednesday; soft red winter wheat basis bids were steady to firm, with 5-cent gains in Cincinnati and Chicago; and spring wheat basis bids were steady to weak, with a 5-cent loss in Duluth, grain merchandisers said.

 

In global wheat news, India Wednesday ruled out imports of wheat in the coming months, citing adequate domestic stocks to meet local demand.

 

"There is no question of imports, as we will be left with some of our own carry-forward stocks at the end of the marketing year, after meeting the domestic requirements," Minister of State for Food, Akhilesh Prasad Singh, said on the sidelines of an official function.

 

India's marketing year for wheat runs from April to March. India's domestic wheat futures, which rose earlier this month, have turned downward on reports of excellent sowing progress.

 

Still, CBOT traders have speculated that India would import wheat since early fall for the first time in six years, when India began trading CBOT soft red winter wheat futures for the first time.

 

In key competitor Australia, differences have emerged in Australian government estimates of old crop wheat production.

 

The Australian Bureau of Statistics estimated Wednesday old wheat output at 22.6 million metric tonnes from 13.8 million hectares.

 

On Tuesday, the government's chief commodities forecaster, the Australian Bureau of Agricultural and Resource Economics, forecast old crop output at 20.4 million tonnes from 12.0 million hectares.

 

After annual domestic demand of about 5.5 million tonnes is met, the balance of the crop is available for sale overseas through export monopoly operator AWB Ltd. (AWB.AU), which estimated old crop output at almost 21 million tonnes.

 

Agencies typically explain the difference in output estimates by reference to different survey and sampling methods.