January 22, 2007

 

US Wheat Outlook on Monday: 1-3 cents lower following overnight trade, corn

 

 

U.S. wheat futures are expected to begin Monday's day session 1-to-3 cents lower following weaker prices in overnight activity and spillover weakness from the corn market, sources said. In overnight electronic trading, CBOT March wheat fell 1 1/2 cents to US$4.65 1/2, while KCBT hard red wheat declined 1 3/4 cents to US$4.87 1/2.

 

There was not much fresh news out overnight and wheat should follow the direction of corn, a commission house analyst said. The crop in the winter wheat belt has some snow cover so any cold weather should not affect it, he added.

 

Over the weekend, Egypt purchased 175,000 metric tonnes of wheat - 55,000 tonnes was U.S. soft red winter wheat with the remaining 120,000 tonnes Russian. A CBOT floor analyst termed it "no big deal". Trading should be quiet with price direction dictated by other markets, he added.

 

The Commodity Futures Trading Commission reported Friday that large commercial traders increased their long CBOT wheat futures and options on futures positions by 8,299 contracts and cut their short holdings by 6,311 contracts and are now overall net short 148,205 futures and options on futures.

 

Large index funds reduced their long positions by 13,559 futures and options on futures and trimmed their short positions by 4,844 contracts and are now net long 190,190 contracts.

 

At the KCBT, large commercial traders trimmed their long positions by 2,172 lots and their short positions by 604 contracts and are now net short 37,799 contracts.

 

On daily technical charts, CBOT March wheat remains in a three-month old downtrend on the daily bar chart, a market technician said.

 

The next downside objective for market bears is closing prices below solid support at this month's low of US$4.47 1/2, he said.

 

First resistance is pegged at Friday's high of US$4.73 and then at US$4.80. First support is expected at US$4.64 1/2 and then at US$4.60.

 

March KCBT wheat closed at the weekly low close Friday. First resistance is seen at US$4.94, Friday's high and then at US$5.00. Support is seen at US$4.86 1/2 and then at US$4.80.

 

Mainly dry weather is expected through Wednesday in the U.S. hard red winter wheat belt after 4-8 inches of snow was reported in much of the region over the weekend, DTN Meteorologix Weather said. Temperatures will average around normal over the next several days.

 

In the U.S. soft red winter wheat belt, snow and rain fell in the region. Dry weather is expected over next several days with temperatures near-to-above normal the next several days, Meteorologix said.

 

In other wheat news, China's cash wheat prices were stable as supplies remain abundant, sources said.

 

Recent auctions of state-owned wheat have helped ease supply tightness, analysts said.

 

The U.S. Department of Agriculture is scheduled to release the weekly export inspections at 11:00 a.m. EST (1600 GMT).