January 30, 2008

 

US Wheat Outlook on Wednesday: Mostly lower as markets consolidate

 

 

U.S. wheat futures are poised to start Wednesday's day session mostly lower on profit-taking and follow-through selling from the overnight, traders said.

 

Benchmark Chicago Board of Trade March wheat is called to open 3 to 5 cents per bushel lower. In overnight electronic trading, CBOT March wheat fell 4 3/4 cents to US$9.39 1/4.

 

Kansas City Board of Trade wheat futures also were lower overnight and should start on the defensive, traders said. Minneapolis Grain Exchange March wheat should start firmer after soaring 17 1/2 cents overnight to US$13.44 1/2 on strong demand.

 

Aside from nearby MGE wheat, wheat is due to consolidate after recent rallies, a CBOT floor analyst said. Traders also will be waiting to see the outcome of the Fed's meeting on interest rates, he said.

 

It remains bearish for U.S. wheat futures that Argentina said Tuesday it planned to reopen its export registry for wheat. New wheat exports will be limited to 2 million metric tonnes and spread over the next five months, with a maximum of 400,000 tonnes shipped per month, Argentina's Agriculture Secretariat said.

 

In other export news, the Taiwan Flour Millers Association said it bought 80,000 metric tonnes of U.S. No. 1 wheat, including 48,420 tonnes of dark northern spring wheat and 24,780 tonnes of hard red winter wheat, in a tender concluded Wednesday. The wheat is set to be delivered in two shipments: the first shipment will arrive April 4-18 and the second will arrive April 21-May 5.

 

Japan said it is seeking 41,000 metric tonnes of dark northern spring wheat in a routine tender to be concluded Friday. The shipment is expected to arrive April 6 to May 15.

 

Jordan said it was extending the deadline for its tender to buy 100,000 tonnes of hard wheat to Feb. 5. The deadline, previously Jan. 30, was moved due to snowstorms disrupting work in Jordan, an official said. The tender was for wheat of any origin, on a cost and freight basis.

 

There do not appear to be any major weather concerns in the U.S. as the winter wheat crop is still dormant, an analyst said. Icy temperatures are hitting areas of the eastern Midwest and Delta, but the conditions are not cold enough to harm wheat, according to DTN Meteorlogix.

 

Some precipitation is possible in the U.S. central and southern Plains Wednesday night into Thursday and again on Monday, Meteorlogix said. The moisture should be mostly in light amounts, the private weather firm said.

 

Showers are possible in wheat areas of India and Pakistan this coming weekend, Meteorlogix said. Rainfall, if any, would favor developing wheat in the region, the firm said.

 

Chicago wheat bulls' next upside price objective is to push and close the March contract above strong technical resistance at US$9.66 1/2, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$9.15. First resistance is seen at US$9.50 and then at US$9.60. First support lies at Tuesday's low of US$9.40 and then at US$9.30.

 

At the KCBT, bulls' next upside price objective is pushing and closing prices above solid resistance at the contract high of US$10.33, the analyst said. The bears' next downside objective is pushing prices below solid support at US$9.66. First resistance is seen at US$10.00 and then at US$10.11 1/2. First support is seen at Tuesday's low of US$9.79 and then at US$9.66.