January 31, 2007

 

US Wheat Outlook on Wednesday: 1-2 cents higher, following overnight trade

 

 

U.S. wheat futures are predicted to begin Wednesday's day session 1 to 2 cents higher as light follow through buying from the steady tone in overnight activity and end of month position squaring is expected to support prices, sources said.

 

In overnight electronic trading, CBOT March wheat rose 2 cents to US$4.61 1/2, while March KCBT hard red wheat gained 1/4 cent to US$4.82.

 

The market could see some follow through from Tuesday, but the overnight trade didn't really extend the gains, a commission house analyst said.

 

It's the last trading day of the month and there could be some evening up ahead of it, a floor broker said. Stats Canada released its wheat stocks estimate, which was under analysts estimates and could also be supportive, he said.

 

Statistics Canada reported all wheat stocks were 22.289 million metric tonnes as of Dec. 31, well below the 25.0 million to 28.0 million expected by analysts.

 

The lack of market moving news could see wheat direction being dictated by the outside markets, a floor trader added.

 

On daily technical charts, CBOT March wheat reached a three-week low Tuesday before recovering to finish higher and near the session high on light short covering, a technical analyst said. The bulls' next upside price objective is to close prices above solid resistance at US$4.86 1/2 per bushel, while the bears objective is closing prices below solid support at US$4.47 1/2 per bushel.

 

First resistance is seen at this week's high of US$4.62 1/2 and then at US$4.70. First support is seen at Tuesday's low of US$4.53 1/2 and then at US$4.50.

 

March KCBT wheat closed near the session high Tuesday on position squaring after hitting a fresh three-week low early in the session, the analyst said.

 

First resistance for KCBT March is seen at US$4.85, and then at US$4.90. First support is seen at US$4.78 and then at US$4.74.

 

In the U.S. Midwest, soft red wheat growing area there is a chance for snow showers Thursday and Friday, DTN Meteorologix Weather said. Temperatures are expected below normal Wednesday and well below normal in the western half of the region Thursday and Friday and below normal Thursday and Friday in the eastern half of the region.

 

In the U.S. hard red winter wheat belt, there is a chance for light precipitation Thursday and Friday in the southern sections, with only scattered snow showers elsewhere in the region, Meteorologix Weather said. Temperatures are predicted to average below normal.

 

In other wheat news, South Korean flour mills bought 21,500 metric tonnes of U.S. wheat from Cargill in a tender concluded Wednesday, a Seoul-based trader said.

 

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales report for the period ending Jan. 25, at 8:30 a.m. EST (1430 GMT).