October 30, 2008


US Wheat Outlook on Thursday: Seen 1-2 cents lower on corn, profit-taking



Chicago Board of Trade wheat futures are expected to open 1-2 cents a bushel lower Thursday, taking the lead of corn, as prices set back after Wednesday's rally on profit-taking, traders said.


Overnight trade saw December CBOT wheat decline 1 1/2 cents to US$5.59 3/4, while Kansas City Board of Trade wheat lost 2 cents to US$5.96 a bushel. Minneapolis Grain Exchange December wheat continued to climb, however, adding 6 1/2 cents to US$6.68 a bushel.


The U.S. dollar index is lower, but wheat will likely encounter profit-taking pressure after Wednesday's rally saw U.S. prices appreciate between 7% to 9%, a trader said. Normally a weak dollar is bullish for U.S. commodities as it makes exports cheaper to foreign countries.


"Wheat prices could struggle on the open this morning, after an overnight rally attempt faded with weakness in the other markets," said Bryce Knorr, senior editor at Farm Futures.


In other key markets, crude oil is posting slight gains, gold is higher and the Dow Jones industrial average is seen opening sharply higher despite news that U.S. gross domestic product in the third quarter weakened to its lowest level in seven years, falling to a 0.3% annual rate.


Export sales for the week to Oct. 23 were near the high end of trade expectations, at a net 460,400 metric tonnes for the 2008-09 crop year, up 20% from the previous week, the U.S. Agriculture Department reported. The data at least show some evidence that the low prices last week spurred solid demand.


Export shipments totaled 590,300 tonnes and were up 14% from the previous week. The primary destinations were Japan with 75,700 tonnes, Iran with 66,400 tonnes and Egypt at 65,500 tonnes, the USDA said.


Japan is looking for 96,000 tonnes in a tender to be concluded Friday, with shipments expected to arrive between Dec. 21 and Jan. 31. From the U.S., it seeks 48,000 tonnes of dark northern spring, 13,000 of western white and 14,000 tonnes of semi-hard wheat. Japan is also looking at buying 21,000 tonnes of western red spring from Canada.


Weather conditions on the central and southern Plains are expected to be warm and dry the next five days, which will favor final winter wheat planting efforts and early crop development, private forecaster DTN Meteorlogix said. Showers and cooler temperatures are seen near the middle of next week but are not expected to cause significant concern.


The favorable weather conditions are expected to keep wheat futures in check, the trader said.

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