February 5, 2007

 

US Wheat Outlook on Monday: 2-4 cents higher start seen on overnight gains

 

 

U.S. wheat futures are expected to start Monday's day session trading 2 to 4 cents higher as firm prices in overnight trade and stronger soybean prices are expected to provide support for wheat at the opening, sources said.

 

In overnight electronic trading, CBOT March wheat rose 3 1/2 cents to US$4.64 3/4, while March KCBT hard red wheat gained 1 cent to US$4.88.

 

Wheat should start out better on overnight strength and technical support, a floor trader said.

 

There is little fresh news out for wheat, so it will take its direction from soybeans, which had good gains overnight, a commission house analyst said.

 

In addition, outside markets are higher so price direction could be supported by the prices of other commodities, he added.

 

Reports of bird flu discovered in Great Britain should not have much impact on wheat, the analyst noted. The market has shrugged off the last few reports about bird flu, he said.

 

Large commercial traders reduced their short CBOT wheat futures and options on futures positions by 7,667 contracts and cut their long holdings by 2,875 contracts and are now overall net short 148,197 futures and options on futures, the CFTC reported Friday.

 

Large non-commercial traders added 4,225 contracts to their short holdings and trimmed their long positions by 1,557 contracts, and are now net short 14,251 contracts as of Jan. 30, the CFTC said.

 

At the KCBT, large non-commercial traders reduced their long positions by 1,279 contracts, while adding 556 contracts to their short positions and are now net long 22,142 contracts.

 

Large index fund traders didn't significantly change their positions at either exchange.

 

On daily technical charts, the next downside objective for CBOT March wheat is closing prices below solid support at the January low of US$4.47 1/2 per bushel, a technical analyst said. The next upside price objective is closing prices above solid resistance at US$4.86 1/2.

 

First resistance is seen at US$4.64 1/2 and then at US$4.70. First support is seen at Friday's low of US$4.56 and then at last week's low of US$4.53 1/2.

 

March KCBT wheat closed slightly lower Friday but nearer the session high, the analyst said.

 

He sees first resistance for KCBT March is seen at US$4.88 1/2, Friday's high, and then at US$4.94 1/2. First support is seen at US$4.81 1/2 and then at US$4.78.

 

In the U.S. Midwest soft red wheat growing area there is a chance for light snow in parts of the region Tuesday before dry weather returns Wednesday, DTN Meteorologix Weather said. Temperatures are forecast to average well below normal west and below to much below normal east.

 

In the U.S. hard red winter wheat belt, there is a chance for a little light snow or flurries Tuesday and Wednesday, Meteorologix said. Temperatures are expected to average near to above normal Tuesday and near to below normal Wednesday.

 

In other wheat news, Egypt's Food Industries Holding Co. bought 36,750 metric tonnes of Russian wheat for immediate delivery, Egyptian traders said Sunday.

 

India's planted wheat acreage totaled 28.2 million hectares in the Oct. 1-Feb. 2 period, up from 26.64 million hectares in the year-earlier period, India's Ministry of Agriculture said Friday. The condition of the wheat crop was normal, the ministry added.

 

Rains in parts of eastern and southern Australia eased or removed some short- and medium-term rainfall deficiencies, but severe longer-term deficiencies remain, which could threaten the viability of winter crops, the country's Bureau of Meteorology reported Monday.

 

Wheat prices in China were stable in the week ended Monday as supply and demand were balanced, analysts said.

 

Monday morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 11:00 a.m. EST (1800 GMT).