December 29, 2005

 

US Wheat Outlook on Thursday: Down 1-2 cents on technical setback

  

 

U.S. wheat futures were called to open down 1 cent to 2 cents Thursday on a setback from this week's fund-led climb to 2-1/2 month highs in nearby wheat futures, brokers said.

 

Anticipation that long-only index funds will buy wheat futures actively in early 2006 amid new money inflows and index reweighings has been behind the speculative rally, they noted.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1 1/2 cents at US$3.44.

 

The contract is within striking distance of a psychological objective at US$3.50, said one technical analyst. Beyond there, second resistance lies at US$3.58. First support lies at US$3.40 1/2 and then at US$3.36.

 

Holiday-type trade was expected at the three U.S. wheat markets Thursday, with traders eyeing a noon CST close Friday and Monday's shuttered markets due to the New Year's Day holiday.

 

Cash U.S. hard red winter wheat basis bids were steady to mixed Thursday, with a 4-cent loss in Portland, Ore., and a 5-cent gain in Superior, Neb.; soft red winter wheat basis bids were steady to weak, with a 1-cent loss in St. Louis, Neb.; and spring wheat basis bids were steady to weak, with a 2-cent loss in Portland, Ore., grain merchandisers said.

 

Overnight U.S. wheat export sales were quiet.

 

In global wheat news, China's total grain harvest for 2005 was expected to reach a record 484 million metric tonnes, up 3% from last year, due to rising yields and despite land erosion and construction, the state media said.

 

However, China will likely face a shortage of grains next year as demand is expected to exceed output by 15 million metric tonnes, the official People's Daily reported, citing Agriculture Minister Du Qinglin.

 

A lack of Chinese purchases of U.S. soft red winter wheat this year, following good purchases last year has helped depress export sales and CBOT SRW wheat prices, U.S. wheat traders noted.