January 18, 2008

 

US Wheat Outlook on Friday: Mixed start; MGE leads on follow-through

 

 

U.S. wheat futures are poised to start Friday's day session mixed, with Minneapolis Grain Exchange contracts leading the upside on follow-through buying and ongoing supply concerns, traders said.

 

Benchmark Chicago Board of Trade March wheat is called to open 2 to 4 cents per bushel lower. In overnight electronic trading CBOT March wheat fell 1 1/2 cents to US$9.39.

 

Kansas City Board of Trade and MGE wheat futures were mostly firmer overnight and should see some carryover buying, traders said. The hard wheat contracts should continue to gain on CBOT soft red winter wheat futures as the U.S. Department of Agriculture has estimated that SRW wheat acres are up sharply from a year ago, they said.

 

Gains at the KCBT and MGE are expected to tug CBOT wheat higher, a CBOT floor trader said. Market participants may be reluctant to go into the three-day weekend holding short positions, he said. The CBOT, KCBT and MGE are closed Monday in observance of Martin Luther King Jr. day.

 

MGE March wheat in overnight electronic trading blazed to another new all-time high and came within striking distance of US$12 per bushel. The contract set a new high of US$11.94, exceeding the previous high of US$11.64 3/4 during Thursday's day session. That is the highest price ever for any wheat contract at a U.S. exchange.

 

CBOT wheat bulls have the near-term technical advantage and their next upside price objective is to close March wheat above strong technical resistance at Thursday's high of US$9.56 1/2, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$9.20, he said.

 

First resistance is seen at Thursday's high of US$9.56 1/2 and then at US$9.75. First support lies at Thursday's low of US$9.36 and then at US$9.30.

 

At the KCBT, bulls have "solid technical power" and their next upside price objective is closing March wheat above major psychological resistance at US$10.00, the technical analyst said. The bears' next downside objective is pushing prices below solid support at US$9.64, which would fill on the downside Thursday's upside price gap on the daily bar chart, he said.

 

First resistance is seen at Thursday's high of US$9.89 and then at US$10.00. First support is seen at Thursday's low of US$9.76 1/2 and then at US$9.64.

 

Hard red winter wheat, traded at the KCBT, should see a surge of fairly cold weather move across the U.S. central and southern Plains on Tuesday morning, DTN Meteorlogix said. Early indications suggest temperatures near or slightly below zero degrees Fahrenheit, but the cold air is not expected to cause major problems for wheat, the private weather firm said.

 

The coldest temperatures in major soft red winter wheat areas of northwest Ohio and south Illinois are expected to remain above zero Fahrenheit. Early indications suggest there won't be any significant damage to wheat due to the cold, Meteorlogix said.

 

There was not too much surprising news out overnight, a CBOT floor trader says. India's agriculture minister said the country had satisfactory stocks of wheat and that the government was in no hurry to import more.

 

India planted almost as much as last year's record area of 28.04 million hectares because of good late sowing in some key provinces, according to new official data. Wheat sowing during Oct.1-Jan. 18 was at 27.44 million hectares, down from 28.02 million hectares a year earlier, according to the data.