January 4, 2006

US Wheat Outlook on Wednesday: Flat-down 1 cent on overbought signs, e-CBOT

U.S. wheat futures were called to open steady to down 1 cent on Wednesday on overbought technical signs after nearby Kansas City Board of Trade and Minneapolis Grain Exchange March contracts matched their contract highs during Tuesday's fund-led rally, brokers said.

Farmer sales of KCBT wheat were seen on Tuesday's rally, but traders noted the sales were lighter than usual as producers have already sold a bigger percentage of their crops this fall than they normal would and some are holding back in hopes of a crop-scare rally amid extremely dry Southern Plains weather.

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1/2 cent at USUS$3.45 1/2 per bushel.

First resistance was seen at USUS$3.47--last week's high--and then at USUS$3.50. First support lies at USUS$3.41 1/2--Tuesday's low--and then at USUS$3.40, a technician said. The 9-day relative strength index for CBOT March stood at 70 early Wednesday, matching the overbought benchmark of 70.

The 9-day relative strength index for KCBT March stood at 73 early Wednesday, while the 9-day RSI for MGE March wheat was 76.

Cash U.S. hard red winter wheat basis bids were mostly steady to mixed Wednesday, with a 10-cent gain in Hutchinson, Kan. and a 2-cent loss in Portland, Ore.; soft red winter wheat basis bids were steady to mixed, with a 5-cent gain in St. Louis, Missouri; and spring wheat basis bids were steady to weak, with a 10-cent loss in Minneapolis rail and a 5-cent loss in Grand Forks, North Dakota, grain merchandisers said.

Traders continued to eye reports of U.S. hard red winter wheat crop progress amid lingering reports of grassfires across top producers Oklahoma and Texas due to abnormally dry conditions.

Forecasters this week were predicted continued dry, windy weather.

Overnight U.S. wheat export sales were quiet.