December 15, 2006

 

US Wheat Outlook on Friday: 1-2 cents lower on weaker overnight trend

 

 

U.S. wheat futures are expected to start Friday's day session weaker on lower overnight trade and with little fresh news to boost prices, sources said.

 

Benchmark Chicago Board of Trade March wheat is called to open down 1-2 cents per bushel.

 

In e-cbot overnight electronic trade, CBOT March wheat stumbled 2 cents lower to US$4.89 1/2.

 

Wheat will likely begin softer Friday to absorb some of the overnight selling, noted Shawn McCambridge, analyst with Prudential Financial in Chicago. There also may be some consolidation, sources said.

 

Some light short-covering may appear later in the day session going into the weekend, McCambridge added.

 

Wheat is still in a technical down-trending channel, although a weekly high close for CBOT March wheat Friday would give bulls some fresh upside technical momentum, a technical analyst said.

 

CBOT March wheat prices closed higher and near mid-range Thursday.

 

The next downside price objective for the bears is closing prices below support at US$4.65, which is the bottom boundary of the downtrend channel, he said. The bulls' next upside price objective is to close prices above solid resistance at US$5.00.

 

First resistance is seen at Thursday's high of US$4.96 and then at US$5.00. First support lies at Thursday's low of US$4.86 1/2 and then at US$4.81, he said.

 

There is little fresh news out to direct prices, sources said.

 

In fresh confirmation that India is planting a larger wheat crop, new government data shows wheat plantings so far since October have covered 23.25 million hectares, which covers roughly 90% of the normal area. That is up from 21.06 million hectares a year earlier.

 

If India decides to import or export wheat next year, planting progress is one of the main factors on which its 2007 wheat trade will depend on.

 

Satisfied with the progress of local plantings, India has extended the period for duty-free imports of wheat by trading and processing companies by another two months until Feb. 28, a government official said. The official said the government was no longer worried about a surge in imports discouraging farmers from sowing the crop.

 

The extension probably won't boost imports, however, because domestic supplies are adequate and local prices are low, trade officials and flour millers said.

 

In the U.S., meanwhile, some favorable weather seems to be on track for hard red winter wheat areas, the DTN Meteorlogix weather firm reported. There is a chance for beneficial moisture to hit wheat areas of Texas, Oklahoma and southeast Kansas on Tuesday and Wednesday of next week, the firm said.

 

In the eastern Midwest, warm temperatures favor wheat during the next five days, Meteorlogix noted. Rain is likely in the area through the middle of next week, possibly ending as snow, the firm said.

 

China should see colder weather during the next three days, but it does not look to be cold enough to harm dormant winter wheat, Meteorlogix said.

 

In other news, Ukraine state reserve concluded purchasing contracts for 155,110 metric tonnes of grain to Dec. 14, out of which 148,310 tonnes had already been delivered by domestic producers and paid for by the state reserve, the state reserve's press office reported Friday.

 

State reserve's total grain purchases to date amounted to 281,630 tonnes. That is short of the target set by the government for the purchases of grain harvested this year, which is 400,000 tonnes.

 

Kazakhstan is likely to export to Iran 1 million metric tonnes of 3rd grade soft milling wheat annually, according to a statement from a Kazakhstan-Iran intergovernmental commission.