Sunday, October 14, 2007

US Wheat Outlook: 8-11c Higher On Morocco, Positioning

A Moroccan tender and positioning ahead of a government crop report are expected to support U.S. wheat futures at the start of Thursday's day session, traders said.

Wheat futures are called to open 8-11 cents per bushel higher. In e-cbot overnight trading, Chicago Board of Trade December wheat climbed 11 1/2 cents to $8.64 1/2.

Morocco's state wheat buyer, the Office National Interprofessional des Cereales et des Legumineuses, said it was tendering to buy 500,000 metric tons of soft milling wheat of any origin. There are expectations Morocco will buy French wheat, but the tender is still seen as supportive because prices are high and world supplies remain tight, a CBOT trader said.

A sale of 100,000 tons of U.S. hard red winter wheat to Iraq, announced by the U.S. Department of Agriculture, should also strengthen prices, an analyst said.

Japan, meanwhile, said it bought 145,000 metric tons of wheat, including 85,000 tons from the U.S., in a routine tender. The entire shipment is expected to arrive Dec. 1 to Jan. 10.

The trade, along with watching for fresh demand, is also waiting for the USDA to release its October supply and demand report. The report, due out at 8:30 a.m. EDT Friday, is expected to show lower forecasts for U.S. and world ending stocks and for Australia's drought-ravaged crop.

Analysis of early harvested wheat in southern Queensland and northern New South Wales states indicates small, poor quality grain, according to Australia's GrainCorp Ltd. Nevertheless, GrainCorp said grain quality overall in southern Queensland should be good.

Thundershowers may linger in southeast Queensland on Thursday. The rainfall will help build soil moisture for summer crops and any late filling wheat, DTN Meteorlogix said.

However, the balance of Australia's wheat belt looks to be drier during the next seven days, Meteorlogix said. That will continue to stress the crop, according to the weather firm.

Traders are expected to even up positions going into the USDA report and that should give prices a boost, a CBOT trader said. CBOT December wheat prices Wednesday closed nearer the session high on short covering and some bargain buying after hitting a fresh three-week low early on, a technical analyst said.

Bulls are still in some near-term technical trouble in the wheat markets, the analyst said. Their next upside price objective is to push CBOT December wheat above resistance at $8.88 1/2, which is the top of Monday's downside price gap on the daily bar chart. The next downside price objective for the bears is pushing prices below solid support at $8.30.

First resistance is seen at Wednesday's high of $8.58 1/2 and then at this week's high of $8.75. First support lies at Wednesday's low of $8.41 and then at $8.30.

At the Kansas City Board of Trade, bulls' next upside price objective is pushing December wheat above resistance at $8.94, which is the top of Monday's downside price gap on the daily bar chart. The bears' next downside objective is pushing prices below solid support at $8.20.

First resistance is seen at $8.60 and then at $8.65. First support is seen at Wednesday's low of $8.41 3/4 and then at $8.30.

Hard red winter wheat, traded at the KCBT, in the U.S. central and southern Plains should see favorable conditions for planting, Meteorlogix said. Some areas could use more rain but most have adequate soil moisture. Rainfall later this weekend or early next week could delay field work while adding to soil moisture, the weather firm said.

In other news, U.K. farmers harvested 13.4 million metric tons of wheat in 2007, a drop of 9% on the year, according to provisional estimates issued by the Department for Environment, Food and Rural Affairs. The harvest results are below previous data compiled by Defra and the Home Grown Cereals Authority, which had put the U.K. wheat crop at a range of 13.5 million-14.0 million tons.


Post a Comment

<< Home