December 20, 2005

 

US Wheat Outlook on Tuesday: Flat-up 2 cents on possible fund short-cover

  

 

U.S. wheat futures were called to open flat to up 2 cents per bushel Tuesday on possible fund short-covering in Chicago Board of Trade wheat futures, where funds hold a near record net short position, brokers said.

 

"You're right up near the 50-day moving average in both the (CBOT March) corn and the wheat," one broker said. "If you break through that level, you could see some active fund short-covering."

 

CBOT traders have been anticipating some fund position evening into the New Year.

 

The 50-day moving average for most-active March wheat was US$3.28 per bushel; the 50-day moving average for CBOT March corn was US$2.08 3/4, Monday's settlement.

 

In overnight trade, CBOT March closed up 1 cent at US$3.24 1/4. First technical resistance was seen at US$3.26 3/4 and then at US$3.30. First support lies at US$3.19 1/2 - Monday's low - and then at US$3.17.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Tuesday, with a 7-cent gain in Superior, Neb.; soft red winter wheat basis bids were steady to weak, with a 3-cent loss in Billings, Mont.; and spring wheat basis bids were steady to weak, with a 3-cent loss in Cincinnati, Ohio, grain merchandisers said.

 

Overnight U.S. wheat export sales were quiet.

 

In global wheat news, Australia's current crop could total 25.0 million metric tonnes, well above last year's 20.4 million tonnes, according to a report Tuesday on Australian Broadcasting Corp. radio.

 

On Dec. 11, the Australian Bureau of Agricultural and Resource reiterated its current new wheat crop forecast of 24.1 million tonnes, which remains around the midpoint of wheat exporter AWB Ltd.'s (AWB.AU) current forecast range. The USDA last forecast a 2005-06 Australian wheat crop of 24 million tonnes.

 

After domestic Australian annual demand of about 5.5 million tonnes of wheat is met, the balance is available for export, making Australia a major global supplier. Chinese agricultural experts said Tuesday that the country's crop hadn't been harmed by recent cold weather.

 

The U.S. Department of Agriculture reported Dec. 9 that the Chinese wheat crop would 96 million metric tonnes, up 1 million from its November forecast.

 

Wheat buyers in Egypt, the second largest wheat importer worldwide after China, said Tuesday that Black Sea imports would continue to be a feature amid competitive prices and speedier deliveries than other global wheat sellers.

 

Egyptian officials also noted the quality of Russian wheat was suitable for the Egyptian market.

 

In Europe, analysts expected French wheat exports to pick up next quarter as Black Sea sales slow due to crop production worries in the latter region.

 

French-based analytical firm Strategie Grains points out that France had only shipped out 250,000 tonnes of wheat to Egypt by late November, less than a fourth of its shipments during the same period a year earlier.

 

But with increases in Black Sea port prices and some recent business with Egypt, French wheat exports out of the main port of Rouen have already started to improve. French wheat shipments from Rouen during the first half of December totaled 248,537 tonnes, up 14% from 218,594 tonnes for the same time last year.