October 23, 2008


US Wheat Outlook on Thursday: Seen higher; following other markets



U.S. wheat futures are expected to start Thursday's day session with modest gains, following the general direction of other markets, analysts said.


In overnight electronic trading, Chicago Board of Trade December wheat was 2 3/4 cents higher at US$5.20 1/2 and CBOT March wheat was 1 1/2 cents higher at US$5.39.


A choppy tone could be in store for the market, with oversold conditions generating support, while overall bearish sentiment and a lack of fresh export demand limits bullish optimism, said Shawn McCambridge, senior gains analyst with Prudential Bache.


Traders said it will be tough to hold gains without some outside support, as a lack of fresh U.S. export business limits bullish enthusiasm.


There is export business out there, but not a lot coming to the U.S. with Japan canceling its weekly tender and weekly U.S. sales near the lower end of estimates.


There is the impression that it's a buyer's market, and if prices rally, end users back away, making it tough for futures to sustain bullish momentum, McCambridge added.


A market technician said CBOT wheat prices are still in a six month downtrend on the daily bar chart. The next downside price objective for December wheat is pushing and closing prices below major psychological support at US$5.00. The next upside price objective is to push and close December futures prices above solid technical resistance at this week's high of US$5.79 a bushel.


First resistance is seen at US$5.25 and then at US$5.43. First support lies at Wednesday's low of US$5.16 and then at US$5.00.


U.S. Department of Agriculture reported total weekly wheat export sales were a net 386,900 metric tonnes for the week ended Oct. 16. Analysts had forecast sales between 300,000 and 550,000 metric tonnes. The primary buyers were Guatemala with 60,000 metric tonnes and China with 60,000 tonnes.


The DTN Meteorlogix Weather Service forecast said rain, snow and colder temperatures likely delay the final planting effort in the central and southern U.S. Plains during the next 3-5 days. After that it looks to be warmer and drier.


In other demand news, the Philippines Thursday bought 40,000 metric tonnes of wheat from Ukraine at US$180 a tonne, cost and freight for January shipment, a feedmilling executive said.


Japan's Ministry of Agriculture, Forestry and Fisheries has rejected all bids in its tender to purchase 75,000 metric tonnes of wheat, a ministry official said Thursday.


Meanwhile, U.K. 2008 wheat production will hit a record 17.5 million metric tonnes, up 32% on the year, forecast the government's Department for Environment Food and Rural Affairs Thursday.

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