January 30, 2007

 

US Wheat Outlook on Tuesday: Flat to 1 cent lower, seeking direction

 

 

U.S. wheat futures are expected to start Tuesday's day session trading flat-to-1 cent lower as the lack of fresh fundamental news is expected to keep prices close to Monday's settlement prices at the start, floor sources said.

 

In overnight electronic trading, CBOT March wheat ended unchanged at US$4.56 1/2 per bushel, while March KCBT hard red wheat slipped 1 3/4 cents to US$4.76 1/2.

 

Wheat remains a follower of the other markets particularly corn, a floor trader said. The weather is expected to get colder but the winter wheat crop has good snow cover to protect the dormant plants, the trader said.

 

Technically the market is breaking down and not much has changed since Monday, a commission house analyst said. If corn breaks down, wheat is vulnerable to further weakness, he added.

 

March wheat has declined over 30 cents from the levels reached earlier in January.

 

On daily technical charts, CBOT March wheat hit a fresh three-week low Monday and saw a downside "breakout" from a two-week old sideways trading range, a market technician said. The next downside price objective is closing prices below solid support below this months low of US$4.47 1/2 per bushel, the technician said. The next upside price objective is closing prices above solid resistance at US$4.86 1/2.

 

First resistance is seen at Monday's high of US$4.62 1/2 and then at US$4.70. First support is seen at US$4.55 1/2 and then at US$4.50.

 

March KCBT wheat closed near the session low Monday and reached a fresh three-week low, with the bears gaining fresh downside technical momentum, the technician said.

 

First resistance for KCBT March is seen at US$4.80, and then at US$4.85. First support is seen at Monday's low of US$4.78 and then at US$4.75.

 

In the eastern U.S. Midwest soft red wheat growing area there is a chance for snow showers Wednesday and Thursday with mainly dry conditions Friday in the west with an additional chance of moisture in the east Friday, DTN Meteorologix Weather said. Temperatures are expected to average well below normal in west and below normal east in the period.

 

In the U.S. hard red winter wheat belt, there is a chance for light precipitation Wednesday and Thursday, with less than 0.10 inch possible. An additional chance for light snow or flurries occurs Friday and Saturday. Temperatures are expected to average below normal early and below or well below normal late, DTN Meteorologix Weather said.

 

In other wheat news, Japan said it will skip its weekly tender for wheat this week. Taiwan will tender for 80,000 metric tonnes of U.S. wheat this week, sources said. South Korean flour millers have tendered for 21,500 metric tonnes of U.S. No. 1 wheat, they added.