December 23, 2005

 

US Wheat Outlook on Friday: Steady, position-squaring likely

 

 

U.S. wheat futures are called to open steady on Friday, with position squaring ahead of the long holiday weekend likely to be a feature.

 

Activity in surrounding corn and soybean pits will likely dole out direction for wheat futures, analysts said.

 

Wheat futures will close at 1:00 p.m. EST (1800 GMT) Friday in observance of the Christmas holiday. The Chicago Board of Trade, Kansas City Board of Trade and Minneapolis Grain Exchange will be shuttered on Monday for the holiday. Normal trade resumes on Tuesday. Trade is likely to be slow as many market participants are likely to be absent as they planned to extend the long weekend.

 

In overnight trade, most-active Chicago Board of Trade March wheat slipped 1/4 cent to US$3.30 1/2 a bushel.

 

Technical factors could modestly support wheat. Prices Thursday closed near the session high and hit a fresh five-week high. The bulls are gaining good technical momentum, a technical analyst said, as fund short covering is the most recent feature. The next upside objective for the bulls is to establish a closing price above resistance at US$3.38.

 

After the recent move higher in wheat - and the rest of the grain floor for that matter - some analysts said a pull back could be in order. However, there's not a lot of interest in pressing the market.

 

"There's a fear of getting heavily short ahead of the first of the year when we expect...a wave of index fund buying that week," said one long-time analyst.

 

Private weather firm DTN Meteorlogix notes no real change in the weather forecast from Thursday. They said the southern Plains winter wheat regions should see no significant cold weather threats to the wheat during the next seven to 10 days, with no significant chance for rain during the next seven days.

 

In export news, South Korea bought a total of 21,400 metric tonnes of U.S. wheat Friday, a Seoul trader said. The entire shipment will be shipped Feb. 1-28 but did not give port information.

 

Ukraine will export in the current marketing year (July 1 2005-June 30 2006) 11 million metric tonnes of grain, down from the 11.4 million tonnes exported in the previous marketing year, the agriculture ministry said Friday.

 

China's total winter wheat acreage reached 21.47 million hectares in the October to November planting season, almost unchanged from the same period in 2004, the Ministry of Agriculture said Friday. The crops is progressing well and is in good condition so far.

 

Australian wheat exporter AWB Ltd. (AWB.AU) expects to remain a long-term wheat supplier to Iraq and will bid for the next tender, despite losing out to the US for some tenders recently, a company spokesman said. AWB is some way through a contract to supply about 650,000 metric tonnes of wheat, which McBride said will probably be filled by around late February.