July 31, 2008


US Wheat Outlook on Thursday: Slightly lower on overnight losses



U.S. wheat futures are expected to open slightly lower Thursday as the market continues to drift down amid seasonal pressures, traders said.


Chicago Board of Trade wheat is called 2 to 4 cents lower. In overnight trading, September wheat was down 2 1/4 cents to US$7.85 1/2 per bushel, December wheat was down 1 1/2 cents to US$8.11 and March wheat was up 4 1/4 cents to US$8.40.


The market has fallen throughout the week, and is typically weak this time of year, with harvests pressuring prices, traders said.


"It's seasonally the time of year where we work our way lower," said Larry Glenn, a broker for Frontier Ag.


A trader said volume has been low all week in the wheat market, and that it doesn't "take much to flop it around." Wheat is likely to follow other markets in the absence of fundamental news, a trader said.


Traders note that world demand is strong. Several countries have made purchases recently, although the U.S. has not been the beneficiary of that export demand so far. Glenn said the strong demand will ultimately support the U.S. market, which will eventually get more business.


"There's a lot of world demand, we're not priced right for it, but it's still coming out of the big stack," Glenn said, adding that the export demand could soon boost prices.


In export news, the state-run Grain Board of Iraq has purchased 100,000 metric tonnes of Russian wheat, the board said on its Web site Thursday. The original tender, which closed Sunday, had been for at least 50,000 tonnes of optional-origin wheat.


Also, Jordan's Ministry of Trade and Industry said Thursday it was tendering to buy 100,000 metric tonnes of wheat, of any origin, on a cost and freight basis.


The ongoing crop tour in North Dakota has produced few surprises for the market, traders said.


Drought-stressed wheat seen in northwest North Dakota on Wednesday concerned crop scouts on the second day of the tour. Wheat in central North Dakota was in better condition, with strong yields reported in hard red spring wheat fields, scouts said. Plants had only minor disease problems and pest issues.


Traders said export sales reported Thursday were "solid." The U.S. Department of Agriculture reported net export sales of 726,400 metric tonnes for the week ended July 24. Analysts had projected sales between 350,000 and 550,000 metric tonnes.


In other international news, the Philippines is paying about US$80 a metric tonne less for wheat imports from the U.S. and Canada compared to a month ago due to the recent slide in global prices, Teddy Deocares, a trader with Manila-based Pilmico Flour Mills, said Thursday. Global wheat prices are declining on expectations of a record harvest this autumn.


The DTN Meteorlogix forecast calls for mostly dry conditions in the northern U.S. plains through Saturday, with scattered showers and thunderstorms in east and northeast areas Sunday and Monday. Hot, dry weather in western areas could increase stress to the spring wheat crop, according to the forecast.


The next downside price objective is pushing and closing December CBOT prices below solid technical support at last week's low of US$7.98. The next upside price objective is to push and close December futures prices above solid technical resistance at this week's high of US$8.55 a bushel.


First resistance is seen at Wednesday's high of US$8.23 and then at US$8.40. First support lies at Wednesday's low of US$8.06 3/4 and then at US$7.98.

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