January 16, 2008

 

US Wheat Outlook on Wednesday: Mixed start, with CBOT on the defensive

 

 

U.S. wheat futures are expected to start Wednesday's day session mixed, with overnight losses and profit-taking weighing on Chicago Board of Trade contracts at the opening, analysts said.

 

Benchmark Chicago Board of Trade March wheat is called to open 3 to 5 cents per bushel lower. In overnight trading, CBOT March wheat closed down 3 1/2 cents at US$9.28 1/2.

 

Kansas City Board of Trade and Minneapolis Grain Exchange wheat futures were mostly firmer overnight and should show some strength at the opening, a trader said. KCBT hard red winter wheat futures have been leading CBOT wheat since Friday, when the U.S. Department of Agriculture said HRW wheat seedings were down from a year ago. MGE wheat futures, meanwhile, are in an acreage battle with corn and soybeans, analysts said.

 

Trading should remain volatile during the session, with new crop contracts leading moves to the upside, analysts said. Sellers on Tuesday were reluctant to jump in front of the markets, and their absence could help push prices higher again Wednesday, a trader said.

 

The markets have bullish momentum after rallying for three days on the lower-than-expected USDA acreage estimates. CBOT March wheat prices Tuesday closed nearer the session high and scored a bullish "outside day" up on the daily bar chart, a technical analyst said.

 

CBOT wheat bulls have the solid near-term technical advantage and their next upside price objective is to push and close March wheat above strong technical resistance at US$9.45, the technical analyst said. The next downside price objective for the bears is pushing prices below solid support at US$9.00, he said.

 

First resistance is seen at US$9.45 and then at US$9.50. First support lies at US$9.20 and then at Tuesday's low of US$9.08.

 

At the Kansas City Board of Trade, bulls' next upside price objective is pushing and closing March wheat above solid resistance at US$9.66, the analyst said. The bears' next downside objective is pushing prices below solid support at US$9.24, which would fill on the downside an upside price gap on the daily bar chart, he said.

 

First resistance is seen at US$9.66 and then at US$9.78. First support is seen at US$9.50 and then at US$9.49.

 

There was little fresh news out overnight for the markets, traders said. Weather forecasts look mostly benign for the near term, they said.

 

In the U.S. eastern Midwest and Delta, possible cold weather during the weekend and early next week bears watching as snow cover over soft red winter wheat areas has diminished during the past week, DTN Meteorlogix said. Lows near or slightly below zero degrees Fahrenheit should not do much harm, but any colder than that and it may be more important, the private weather firm said.

 

In the U.S. central and southern Plains, the coldest weather headed for the wheat belt is on track for the next four to six days, Meteorlogix said. In Ukraine, temperatures have warmed to above-normal levels over the eastern region, helping to ease stress to this wheat crop after cold conditions last week, the firm said.

 

India's farm secretary said the country's wheat crop is likely to reach 75 million metric tonnes thanks to good weather, although some industry members are skeptical of pronouncements from the government. The government says India's wheat production in 2007-08 was 74.89 million tonnes.