January 3, 2008

 

US Wheat Outlook on Thursday: Seen starting sharply higher on e-CBOT

 

 

U.S. wheat futures are poised to start sharply higher Thursday on follow-through buying from an overnight rally and amid ongoing bullishness about demand, traders said.

 

Benchmark Chicago Board of Trade March wheat is called to open 20 to 25 cents per bushel higher. In e-cbot overnight trading, CBOT March wheat soared 23 3/4 cents to US$9.38 3/4.

 

CBOT March wheat Wednesday ended limit up, 30 cents higher, and the market has upside momentum heading into Thursday's day session, traders said. There was not much fresh news out overnight, but volume was solid and bulls are encouraged by talk that there is a good amount of business being done in the world, they said.

 

Pakistan said Tuesday it was seeking to import 610,000 metric tonnes of wheat in two separate tenders. In total, the government is looking to buy 1.5 million tonnes of wheat through the state-run Trading Corp of Pakistan by March, an official said Tuesday.

 

Some wheat market participants also are putting new attention on concerns about tight supplies in China, traders said. China set export quotas on some grain flour made from wheat starting Jan. 1 in a move to stabilize domestic grain prices and guarantee grain security after a recent surge in international prices.

 

A U.S. Department of Agriculture attach¨¦ report posted last week on the Foreign Agricultural Services Web site said the Chinese government also was removing the export rebate on grains and flour products to help stabilize domestic prices.

 

Funds have shown renewed interest in buying commodities in 2008 and helped push wheat futures limit up Thursday. The money flows should continue to direct the markets, a CBOT floor broker said.

 

CBOT wheat bulls' next upside price objective is to push and close the March contract above strong technical resistance at US$9.50 per bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at this week's low of US$8.79 1/2.

 

First resistance is seen at US$9.20 and then at US$9.30. First support lies at US$9.00 and then at Wednesday's low of US$8.95.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is pushing and closing March wheat above solid resistance at US$9.50, the analyst said. The bears' next downside objective is closing prices below solid technical support at this week's low of US$8.90. First resistance is seen at Wednesday's high of US$9.43 1/2 and then at US$9.50. First support is seen at Wednesday's low of US$9.21 and then at US$9.15.