January 23, 2007

 

US Wheat Outlook on Tuesday: 3-4 cents higher following e-CBOT, grains

 

 

U.S. wheat futures are predicted to start Tuesday's trade 3 to 4 cents higher, reflecting stronger prices overnight and spillover from corn and soybeans, sources said.

 

In overnight electronic trading, CBOT March wheat rose 4 3/4 cents to US$4.69 3/4, while KCBT hard red wheat gained 2 3/4 cents to US$4.89 3/4.

 

Wheat should follow the rest of the grain floor higher Tuesday, a commission house analyst said. People will be reluctant to sell corn and soybeans ahead of the State of the Union address Tuesday night as they remember last year's speech and its impact on the markets, he said.

 

President George W. Bush will speak to the country at 9:00 p.m. EST (0200 GMT).

 

Last year, the president helped set the corn market in motion, devoting a portion of his speech to the development of alternative fuels, noting that America was "addicted to oil."

 

Corn and soybeans will be reluctant to trade lower ahead of the speech and this will help support wheat, a floor trader said.

 

On daily technical charts, wheat does not have the technical strength that corn and soybeans currently have, stuck in a three-month downtrend on daily bar charts, a technical analyst said.

 

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

 

First resistance is seen at Monday's high of US$4.70 1/2 and then at US$4.75. First support is pegged at US$4.63 1/2 and then at US$4.60.

 

March KCBT wheat hit a fresh two-week low Monday. The bulls' next upside objective is closing prices above solid chart resistance at US$5.00, with the bears downside objective is closing prices below US$4.67 per bushel, the analyst said. First resistance is seen at US$4.90 and then at US$4.93. Support is seen at US$4.85 1/4 and then at US$4.80.

 

Mainly dry weather is expected through Thursday with warmer weather predicted over the next five day to seven days in the U.S. hard red winter wheat belt, DTN Meteorologix Weather said. That will help melt the snow cover with no major outbreaks of cold weather in the period. Temperatures over the next several days will average near-to-above normal.

 

In the U.S. soft red winter wheat belt, there is a chance for light snow or flurries Wednesday with mainly dry weather predicted for Thursday. Temperatures are expected to average near-to-above normal Wednesday and below normal Thursday, Meteorologix said.

 

In other wheat news, Argentina's Agriculture Secretariat raised the country's estimate of wheat production to 14.0 million metric tonnes from 13.7. The U.S. Department of Agriculture's estimate of Argentina's wheat production is 14.2 million tonnes.

 

Tunisia tendered to buy 92,000 metric tonnes of wheat in a tender to be concluded Tuesday, the Tunisian state run Office des Cereales said.

 

The Pusan branch of the Korea Feed Association purchased 104,000 metric tonnes of optional-origin feed wheat from Toepfer and Cargill, a trader in Seoul said Tuesday. Although the wheat is optional-origin, it is likely that most of the wheat will be of Chinese origin, the trader said.