September 21, 2007

 

US Wheat Outlook on Friday: 6-8 cents higher on Iraq sale, overnight

 

 

U.S. wheat futures are poised to start Friday's day session 6-8 cents per bushel higher on strong sales to Iraq and firmer overnight trade, analysts said.

 

In e-cbot overnight trading, Chicago Board of Trade December wheat ended up 8 1/2 cents at US$8.58 1/2.

 

The U.S. Department of Agriculture announced Friday private export sales of 700,000 metric tonnes of hard red winter wheat for delivery to Iraq in the 2007-08 marketing year. The wheat marketing year began June 1.

 

The news followed the release of larger-than-expected weekly export sales data Thursday. Kansas City Board of Trade wheat futures, in particular, should feel a boost from the Iraqi sale as HRW wheat is traded at the KCBT, traders said.

 

It is supportive that there is still strong demand for U.S. wheat, although wheat recently has struggle to rally in the face of bullish news, an analyst said. Long liquidation and profit-taking going into the weekend could pressure prices, he said.

 

CBOT December wheat Thursday closed near mid-range in quieter trading, as the bullish weekly USDA export sales data limited selling, a technical analyst said. No serious chart damage has occurred from recent weakness, and a bullish symmetrical triangle pattern is in place on the daily bar chart, he said.

 

The bulls' next upside price objective is to push and close CBOT December wheat above solid resistance at this week's high of US$8.81, the analyst said. The next downside price objective for the bears is closing prices below psychological support at US$8.00.

 

First resistance is seen at Thursday's high of US$8.63 and then at US$8.65 - the top of a downside price gap on the daily bar chart. First support lies at Thursday's low of US$8.39 and then at US$8.30.

 

At the Kansas City Board of Trade, bulls' next upside price objective is closing December wheat above solid resistance at this week's high of US$8.65, the analyst said. The bears' next downside objective is closing prices below psychological support at US$8.00.

 

First resistance is seen at Thursday's high of US$8.45 1/2 and then at US$8.47 - the top of a downside price gap. First support is seen at Thursday's low of US$8.27 and then at this week's low of US$8.18 3/4.

 

In other news, Russia's agriculture minister indicated the country would limit wheat exports. He said the government was finalizing "a number of details," including "the prospects of the world grain market and the dynamics of grain export from Russia." A final decision is expected next week.

 

Russia harvested nearly 77 million metric tonnes of grain to Friday on 80% of the planned total area, which is 8 million tonnes more than on the same date last year, the agriculture minister said. He said this year's harvest would be over 78 million tonnes, on a level with the last year's harvest of 78.4 million tonnes.

 

Ukraine said its wheat harvest this year is expected to be 13.8 million metric tonnes. The government said about 3 million tonnes of grain would be available for export.

 

Weather in the southern and eastern Ukraine and in southern Russia looks drier through the weekend, with only a few light showers expected Friday, according to DTN Meteorlogix. Australia and Argentina also should stay mostly dry, the weather firm said.

 

There is no change to the overall dry weather pattern in Australia's major wheat areas expected during the next 10 days, Meteorlogix noted. Crop losses will increase as wheat moves through the critical heading stage of development during the next few weeks, the firm said.

 

In the U.S. central and southern Plains, dry weather is expected through Sunday, followed by scattered, light showers from north to south later Sunday and Monday, according to Meteorlogix. Conditions are generally favorable for planting and emerging wheat, but more rain would benefit in some southwest areas, the firm said.