November 18, 2005

 

US Wheat Outlook on Friday: Steady-Up on pre-weekend technical bounce

  

 

U.S. wheat futures were called to open steady to firm Friday following the overnight trend and on a possible pre-weekend technical bounce after heavy fund liquidation in Kansas City and fresh contract lows this week in Chicago Board of Trade wheat futures, brokers said.

 

In the overnight e-CBOT session, December wheat at the CBOT closed up 1 cent at US$3.05 3/4 and March ended steady at US$3.21 per bushel after setting a new contract low Thursday and ending firm.

 

The 9-day relative strength index for both CBOT December and March futures showed oversold conditions, with readings at 30 and 27, respectively.

 

First resistance for CBOT March wheat was seen at US$3.24 - Thursday's high - and then at US$3.27, a technical analyst noted. First support lies at US$3.19 1/4 - Thursday's contract low - and then at US$3.15.

 

Overnight U.S. wheat export sales were quiet.

 

Cash U.S. hard red winter wheat basis bids were steady to firm Friday; soft red winter wheat basis bids were also steady to firm, with a 10-cent gain in Evansville, Ind.; and spring wheat basis bids were steady to firm, with a 15-cent gain in the spot Minneapolis rail bid, grain merchandisers said.

 

Forecasts called for lingering dry weather across the U.S. Southern Plains hard red winter wheat belt through Tuesday and above-normal temperatures from Sunday through Tuesday.

 

In the U.S. Midwest soft red winter wheat belt, forecasts called for possible light flurries Friday and Saturday and mostly dry conditions Sunday through Tuesday. Near to above-normal temperatures were anticipated in the latter period.

 

The U.S. Department of Agriculture will update Monday afternoon its U.S. winter wheat crop condition data.

 

Last Monday, the USDA said 56% of the U.S. winter wheat crop was in good to excellent condition, down 1 percentage point from the previous week.

 

In global wheat news, Argentine farmers had harvested about 8.3% of their 2005-06 wheat crop as of Saturday, according to the Buenos Aires Exchange. Planted area is about 1 million hectares less than last year ago due to poor weather and low wheat prices during key planting periods.

 

The USDA last forecast Argentina's 2005-06 wheat harvest at 12.1 million metric tonnes, compared with 16 million a year ago.

 

The Canadian Wheat Board forecast larger exports during 2005-06 (August/July) than the previous year but declined to give more specific details.

 

Moreover, the scheduled removal of U.S. tariffs on Canadian wheat in March 2006 could lead to more Canadian wheat headed to the U.S., a CWB official said.

 

In 2004-05, Canada exported 10.8 million metric tonnes of wheat and 3.2 million tonnes of durum.

 

Ukraine's State Reserve said it was unable to meet its obligation to export 280,000 metric tonnes of milling wheat as the government has blocked its accounts due to a shortage of milling wheat for the domestic milling industry.

 

India said it had begun trading wheat futures at the CBOT although it still did not believe wheat imports were necessary near-term.

 

There has been speculation in the market that India may buy wheat, possibly from Australia or the U.S.