February 1, 2008

 

US Wheat Outlook on Friday: Firmer start on US$14 MGE march wheat

 

 

U.S. wheat futures are poised to start Friday's day session higher, with support from the nearby Minneapolis Grain Exchange contract breaking above US$14 per bushel for the first time, traders said.

 

Benchmark Chicago Board of Trade March wheat is called to open 10 to 15 cents higher. In overnight electronic trading, CBOT March wheat climbed 12 1/4 cents to US$9.41 3/4 per bushel.

 

MGE March wheat overnight soared to a new all-time high of US$14.03, exceeding the previous high of US$13.73 set Thursday. The move represents the first time that a wheat contract at any U.S. exchange has ever cracked US$14.

 

Spillover support from sharp gains at the MGE should boost CBOT and Kansas City Board of Trade wheat, traders said. MGE wheat is surging on strong commercial demand for spring wheat and fears about tight supplies.

 

Japan said overnight it bought 41,000 tonnes of U.S. dark northern spring wheat in a routine weekly tender for loading in April, according to a media report. Japan is buying some of its wheat earlier than usual to ensure it has enough supply, the report said.

 

Taiwan's government, meanwhile, said it extended a 50% import tariff cut on wheat and wheat powder by six months to ease inflationary pressure. The government decided to extend the import tariff cut until Aug. 5 as global commodity prices remain high, officials said.

 

Amid strong demand for spring wheat, known for its high protein content, MGE March wheat gained more than US$3.60 in January. At the close of business Dec. 31, the contract was trading at US$10.36 1/4.

 

Minneapolis wheat traded above US$14.00 overnight, "so I think that's going to keep our wheat going," a CBOT floor analyst said.

 

CBOT wheat bulls' next upside price objective is to push and close the March contract above strong technical resistance at US$9.50, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$9.00, he said.

 

First resistance is seen at Thursday's high of US$9.42 and then at US$9.50. First support lies at Thursday's low of US$9.09 and then at US$9.00.

 

At the KCBT, the bulls' next upside price objective is pushing and closing March wheat above major psychological resistance at US$10.00, the technical analyst said. The bears' next downside objective is pushing prices below solid support at US$9.46.

 

First resistance is seen at Thursday's high of US$9.78 and then at US$9.87. First support is seen at US$9.60 and then at Thursday's low of US$9.51 1/4.

 

Weather conditions in U.S. winter wheat areas in the near term aren't expected to threaten the crops, forecasters said. Moderate to heavy precipitation may hit the eastern Midwest and Delta on Monday and Tuesday, but there is no severe cold weather in sight, according to the DTN Meteorlogix forecast.

 

In the central and southern Plains, episodes of scattered light precipitation are expected during the next six to 10 days, Meteorlogix said. There is no significant precipitation or severe cold in sight, the private weather firm said.