March 9, 2007

 

US Wheat Outlook on Friday: Steady-firm start seen after USDA reports

 

 

U.S. wheat futures are expected to start Friday's day time trading session steady-to-firm after the U.S. Department of Agriculture's U.S. ending stocks report was unchanged from the previous month, floor traders said.

 

In overnight electronic trading, CBOT May wheat rose 2 cents to US$4.77 1/2 per bushel, while May KCBT hard red wheat rose 1/4 cent to US$5.02 1/2.

 

The reports were unchanged from the previous month with only some fine tuning to the world numbers, wheat continues to lack fresh inputs and will follow the overnight trade and other markets for price direction, a floor trader said.

 

USDA reported U.S. 2006-07 wheat ending stocks were 472 million bushels, unchanged from the previous month and 1 million bushels lower than the 473 million bushel average analyst estimate.

 

World numbers were little changed with India's wheat crop production estimate increased slightly.

 

"We didn't expect that (the USDA) would make any changes, and really they didn't," said Louise Gartner, an analyst with Spectrum Commodities. "It was interesting to see that USDA raised India's wheat production by 1.4 million tonnes, but they are still at least 3 million tonnes below India's own estimate.

 

"I think wheat markets will stay in the same trading range that we have been chopping around in. We can't hang on to a rally to save our life," Gartner said.

 

Wheat needs a catalyst to move beyond its recent trading pattern, a CBOT floor analyst said. Nothing has changed fundamentally and until it does, participants will remain on the sidelines, he said.

 

Wheat will watch other markets for price direction, he added.

 

The market is a little oversold, but the weather in the U.S. remains generally favorable for the crop as it moves out of dormancy, a commission house analyst said.

 

In the U.S. Midwest soft red winter wheat belt, there is a chance for a few light showers west which may linger in the east on Saturday before dry weather returns to the region Sunday, DTN Meteorologix Weather said. Temperatures are expected to average above normal in the period.

 

In the U.S. hard red winter wheat belt showers and thundershowers are possible Saturday into Sunday in southern sections of the region, Meteorologix Weather said. Precipitation may total 0.25-1.00 inch with locally heavier amounts for central and eastern Oklahoma. Temperatures are expected to average above normal.

 

On daily open auction technical charts, CBOT May wheat closed near the session low and some near-term technical chart damage has occurred recently, a technical analyst said.

 

First resistance is seen at US$4.80 and then at US$4.83. First support is seen at US$4.74 and then at US$4.70.

 

May KCBT also settled near the session low Thursday. The bulls' next upside price objective is closing prices above solid chart resistance at last week's high of US$5.24 per bushel. The bear's next downside objective is closing prices below solid support at US$5.00 per bushel, the analyst said.

 

First resistance is seen at US$5.06 1/2, and then at US$5.09. First support lies at US$5.00 and then at US$4.95.

 

Deliveries posted against the March future were 144 contracts. Large issuers included the customer account of Man Financial, which issued 119 contracts. Large stoppers included the customer account of the Astro division of UBS Securities, which stopped 109 contracts. The last trade assigned was March 7. Preliminary open interest in March is 473 contracts.

 

In other wheat news, Friday afternoon the Commodity Futures Trading Commission is scheduled to release the weekly commitment of traders report for the period ending March 6.