November 3, 2005

  

US Wheat Outlook on Thursday: Mixed, technical bounce vs. exports

 

 

U.S. wheat futures were called to open mixed Thursday as support from a possible technical bounce could be offset by a lack of sales to Iraq in the U.S. Department of Agriculture's weekly U.S. export sales report, brokers said.

 

The USDA reported U.S. wheat export sales for the week ended Oct. 27 totaled 433,900 metric tonnes, at the low end of analysts' estimates of 400,000 to 1.4 million metric tonnes.

 

"Some people thought the rumored U.S. sales to Iraq might show up, and they didn't," one CBOT wheat broker said. "That could be a disappointment."

 

U.S. wheat traders have been waiting for USDA's confirmation of a rumored 1 million metric tonne wheat sale to Iraq since an Oct. 26 news report from Baghdad announced the deal had been done.

 

Iraq buys hard red winter wheat from the United States, and lack of confirmation has allowed speculative liquidation of KCBT HRW wheat futures to accelerate in the past week.

 

In Thursday's weekly U.S. wheat export sales data, net sales of 433,900 metric tonnes were 14% above the previous week and 8% over the prior 4-week average.

 

In the overnight e-CBOT session, most-active December wheat at the Chicago Board of Trade closed up 3/4 cent at US$3.13 3/4 after making a fresh contract low and closing near the session low Wednesday.

 

"The bears are still in near-term technical control but the market is still overdone on the downside, technically, and due for at least a corrective upside bounce soon," said Jim Wyckoff, a technical analyst. "It will take a close back above US$3.30 to provide the bulls with a bit of fresh upside momentum."

 

First resistance for CBOT December wheat was seen at US$3.15 and then at US$3.17 1/4 - Wednesday's high. First support was put at US$3.12 - Wednesday's contract low - and then at US$3.10.

 

Cash U.S. hard red winter wheat basis bids were steady; soft red winter wheat basis bids were mixed.; and spring wheat basis bids were steady to firm, with a 7-cent gain in Cincinnati, grain merchandisers said.

 

Forecasts called for mostly dry conditions across the U.S. hard red winter wheat belt through Monday, generally favorable for the emerging crop, forecasters said Thursday.

 

In overnight U.S. wheat export news, Taiwan Flour Millers Association bought 92,250 metric tonnes of U.S. wheat, including 59,150 tonnes of dark northern spring, 25,450 metric tonnes of hard red winter wheat, and 7,650 tonnes of western white wheat.

 

South Korea bought 20,000 tonnes of U.S. wheat, including soft white, hard red winter and dark northern spring; and the USDA's CCC bought 4,130 tonnes of northern spring wheat for Nicaragua.

 

In global wheat news, good October rains across Australia's wheat belt supports forecasts for about 23 million metric tonnes, the government's Bureau of Meteorology reported Thursday.

 

After domestic wheat demand of around 5.5 million tonnes is met, the remainder of national production is available for export, making Australia a key competitor of wheat.