December 13, 2005

 

US Wheat Outlook on Tuesday: Up 1-2 cents on follow-through buying

  

 

U.S. wheat futures were called to open up 1 cent to 2 cents Tuesday on follow-through short-covering amid a large commodity fund short position in Chicago Board of Trade wheat, brokers said.

 

"Wheat closed near its highs yesterday, a technically strong close that suggests additional buying amid the near record short position in Chicago," said one CBOT wheat broker.

 

Moreover, hard red winter wheat traders in Kansas City continue to eye forecasts of another cold front that may be headed next week into the U.S. Southern Plains wheat belt, a supportive element as some fields in the southern section of the belt remain susceptible to winterkill after a dry fall, brokers said.

 

In the overnight e-CBOT session, most-active March wheat at the CBOT closed up 2 1/4 cents at US$3.17 per bushel.

 

First chart resistance was seen at US$3.15 - Monday's high - and then at US$3.18. First support lies at US$3.11 - Monday's low - and then at US$3.07 - the contract low.

 

There were 188 deliveries posted against CBOT December wheat on Tuesday, with scattered stopping and the last date available of Dec. 12.

 

There were 145 deliveries posted Tuesday against Kansas City Board of Trade by Term Commodities. All of the lots were stopped by ADM. The last date available was Dec. 5.

 

There were 37 deliveries posted against Minneapolis Grain Exchange December wheat, with Fimat USA stopping 32 lots and the oldest date available of Dec. 12.

 

Cash U.S. hard red winter wheat basis bids were steady-firm Tuesday; soft red winter wheat basis bids were mixed, with 3-cent losses in Louisville and Cincinnati bids; and spring wheat basis bids were steady-weak, with a 20-cent loss in the spot Minneapolis rail bid, grain merchandisers said.

 

Overnight U.S. wheat export sales were quiet, while Japan said it would buy 141,000 tonnes of wheat Thursday, including 80,000 tonnes of U.S. wheat, sources said.

 

In global wheat news, the European Union during the first quarter of the 2005-06 wheat marketing year was a net importer due to strong Black Sea exports and a surge in demand from Spain and Portugal due to drought, the USDA said Monday.

 

Meanwhile, wheat stocks in Canada and Australia to rise, with ending stocks in the two largest U.S. competitor countries now estimated to be nearly double levels of just 3 years ago.

 

Also in Australia, Western Australian growers are committing to Cooperative Bulk Handling Ltd.'s plan to export wheat outside a monopoly operated by AWB Ltd. (AWB.AU), the CBH said Tuesday.

 

CBH announced Friday it would apply for an export license covering 100,000 metric tonnes of wheat destined for a total of six flour mills that it operates in Indonesia, Malaysia and Vietnam.

 

CBH's application for a license to export will be considered by regulator the Wheat Export Authority, and AWB, which has veto powers over all applications for bulk wheat exports.