December 16, 2005

  

US Wheat Outlook on Friday: Up 1-2 cents on firm e-CBOT, follow-through

 

 

U.S. wheat futures were called to open up 1-2 cents on Friday following firm overnight trade, led by pre-weekend short-covering at the Chicago Board of Trade where speculative commodity funds hold a near record short stance, brokers said.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 1 3/4 cents at US$3.20 1/2.

 

First technical resistance for CBOT March was seen at US$3.20 and then at US$3.26 3/4. First support was put at US$3.18--Thursday's low--and then at US$3.15.

 

Cash U.S. hard red winter wheat basis bids were steady to mixed Friday; the spot bid dropped 7 cents in Superior, Neb., but the bid rose 4 cents at the Texas Gulf.

 

Forecasts for the U.S. HRW winter belt for next week have moderated from this week's cold outlooks, meteorologists said. Mixed precipitation, of no more than a dusting in the western Southern Plains and up to 3 inches were expected Saturday, while dry conditions were expected through next Thursday, said Mike Palmerino of Meteorologix weather service.

 

Temperatures were expected to be below to much-below normal, with low readings ranging from 5 degrees Fahrenheit in the northern HRW belt to the upper teens to mid-20s F in the southern HRW belt through Monday. Temperatures were expected to warm to near to above-normal next week, he said.

 

Soft red winter wheat cash basis bids were steady to weak Friday, with a 4-cent loss in Cincinnati; and spring wheat basis bids were steady-mixed, with a 15-cent gain in Minneapolis rail bid and a 2-cent loss at Portland, grain merchandisers said.

 

"Everything still revolves around the lack of moisture in Texas and Oklahoma and there is no indication that that is going to change next week," he told Dow Jones Newswires on Friday. "However, there is a hint that there may a little better chance of precipiation late next week, but this forecast is questionable. The long-term forecasts change dramatically from day to day."

 

Overnight U.S. wheat export sales were quiet, but lingering support was seen from Thursday's stronger-than-expected weekly U.S. wheat export sales news. Hard red winter wheat sales again topped the list.

 

In global wheat news, India said it was still trading wheat at the CBOT, while Indian traders noted good winter wheat crop sowings had brightened the country's new crop prospects.

 

CBOT traders have speculated that India would need to import wheat due to low stocks before the new-crop is marketed at the end of March. Indian government officials have repeatedly denied the need to import wheat.

 

In Australia, Agriculture Minister Peter McGauran Friday defended an Australian wheat export monopoly operated by AWB Ltd. (AWB.AU), saying criticisms by the European Union were merely attempts to divert attention from its own intransigence in world trade talks.

 

Additionally, AWB Ltd. (AWB.AU) has rejected an application for an export license by Cooperative Bulk Handling Ltd., a Western Australian-based grain storage, handling and marketing concern, according to the latter.

 

CBH announced last Friday it wanted a license covering 100,000 metric tonnes of wheat that it wants to export to six flour mills that it operates in Indonesia, Malaysia and Vietnam through Interflour Group, a joint venture with Indonesia's Salim Group (SG.YY).

 

AWB has powers of veto over all bulk export license applications.