December 8, 2005

 

US Wheat Outlook on Thursday: Up 1-2 cents on firm e-CBOT, export sales

  

 

U.S. wheat futures were called to open up 1-2 cents Thursday on a continued recovery from recent losses, firm e-CBOT trade and weekly export sales that included sales to Iraq, brokers said.

 

Concerns lingered about the U.S. winter wheat crop's condition amid bitterly cold temperatures, but as one broker noted, "Cold temperatures have been in the news for a while now, and the forecasts are (just) being realized."

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed up 1 3/4 cents at US$3.15 in a recovery from Wednesday's break to within 1/2 cent of the US$3.10 contract low.

 

Resistance for CBOT March is seen at US$3.18, while first support lies at US$3.10-the contract low--and then at US$3.05, a technical analyst said.

 

The U.S. Department of Agriculture reported Thursday weekly U.S. wheat export sales totaled 451,400 metric tonnes, within analysts' estimates of 350,000 to 500,000 tonnes.

 

The sales included 202,000 tonnes to Iraq, a former top U.S. wheat customer that has emerged as a strong buyer this year.

 

The weekly sales were 80% above the previous week, but 31% under the prior 4-week average, according to the USDA.

 

Moreover, support was seen from overnight reports that Indian analysts forecast light wheat imports in 2006; one analyst projected an import of 1.0 million tonnes of wheat early next year with the government likely placing import orders in December itself.

 

U.S. wheat traders have speculated that India will need to import wheat due to low stocks before its crop year ends March 31.

 

However, Indian officials have denied the need to import wheat near-term.

 

In overnight U.S. wheat export news, Japan bought 45,000 tonnes of U.S. wheat in an overall tender of 125,000 tonnes and South Korea said it would buy 22,000 tonnes of U.S. wheat Friday.

 

There were 612 deliveries posted against CBOT December wheat on Thursday, with scattered stoppers.

 

There were 9 redeliveries posted Thursday against Kansas City Board of Trade December wheat and 157 deliveries posted against Minneapolis Grain Exchange December wheat, with Fimat USA the largest stopper of 80 lots.

 

Light positioning may be seen in Thursday's U.S. wheat market trade ahead of Friday's U.S. Department of Agriculture ending stocks report.

 

Analysts anticipated the government on Friday would slightly cut its 2005-06 wheat end stocks estimate to 524 million bushels from last month's 530 million.