April 6, 2006

 

US Wheat Outlook on Thursday: Up 1-2 cents on technicals, hard wheat supplies

 

 

U.S. wheat futures were called to open up 1-2 cents per bushel Thursday following firm overnight trade on technical buying and lingering concerns about tight U.S. hard wheat supplies, brokers said.

 

Minneapolis Grain Exchange spring wheat futures should again find support on fears of spring planting delays amid high waters in the Red River Valley and amid lingering rains there.

 

Kansas City Board of Trade hard red winter wheat futures should continue to find support on worries about drought losses in the U.S. Southern Plains hard red winter wheat crop, they noted.

 

In the overnight e-CBOT session, most-active May wheat at the Chicago Board of Trade closed up 2 3/4 cents at $3.49 3/4 per bushel.

 

"Prices are in a pause after the recent sell-off," said a technical source. "The next downside objective for the bears is to close prices below the March low of $3.38 1/2. That would open the door to a move to solid support at the January low of $3.32 1/2. It will take a close back above resistance at $3.55 to provide the bulls with some fresh upside technical momentum."

 

First resistance for CBOT May wheat was seen at $3.47 1/2 - Wednesday's high - and then at $3.50. First support was put at $3.42 - Wednesday's low - and then at $3.40 1/4 - this week's low.

 

Weekly U.S. wheat export sales, at 274,600 metric tonnes (old and new-crops combined) were near the low-end of traders' expectations (200,000 to 450,000 tonnes), brokers noted.

 

Net weekly U.S. old-crop wheat export sales of 271,300 metric tonnes were 47% below the previous week and 32% under the prior 4-week average. Increases for Iraq (100,000 metric tonnes), Mexico (50,500 metric tonnes), Japan (35,400 metric tonnes), South Korea (32,800 metric tonnes), Italy (21,400 metric tonnes), and Colombia (21,000 metric tonnes) were partially offset by decreases for the Philippines (15,700 metric tonnes).

 

Overnight U.S. wheat export sales were quiet.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Thursday; soft red winter wheat basis bids were mostly steady to firm except for a 1 cent loss in the Kansas City truck market; and spring wheat basis bids were steady to firm, with a 5-cent gain in Minneapolis rail bids, grain merchandisers said.

 

Light positioning was expected ahead of Monday's monthly U.S. Department of Agriculture supply and demand report.

 

Analysts expected the government to report 2005-06 U.S. wheat end stocks totaled 534 million bushels, just below the previous month's estimate of 542 million bushels.