February 5, 2008

 

US Wheat Outlook on Tuesday: Firmer start on MGE rally, stats Canada

 

 

A new all-time high at the Minneapolis Grain Exchange and a bullish Canadian stocks estimate are expected to push U.S. wheat futures higher at the start of Tuesday's day session, traders said.

 

Benchmark Chicago Board of Trade March wheat is called to start 10 to 15 cents per bushel higher. In overnight electronic trading, CBOT March wheat finished up 9 3/4 cents at US$9.82 3/4.

 

MGE March wheat overnight closed limit up, or 30 cents higher, at a new all-time high of US$14.63, exceeding the previous high of US$14.33. The contract has surged limit up in a string of recent sessions on steady demand for spring wheat and amid fears about the potential for exhausting supplies.

 

CBOT and Kansas City Board of Trade wheat have been feeling spillover support from the MGE, and that trend should continue, traders said. Nearby contracts at all three exchanges closed limit up Monday, and it would not be surprising to see them touch limit up again Tuesday, a CBOT floor trader said.

 

Japan announced overnight it was seeking 172,000 metric tonnes of wheat, including 81,000 tonnes of U.S. dark northern spring wheat, in a tender to be concluded Thursday. Japan also is seeking 45,000 tonnes of U.S. semi-hard wheat, 21,000 tonnes of wheat from Canada and 25,000 tonnes from Australia. The shipment is expected to arrive April 11 to June 10.

 

"Strong commercial demand for hard spring wheat, traded at the Minneapolis Grain Exchange, continues to be the bullish stalwart for the CBOT," said Brian Hoops, president of Midwest Market Solutions.

 

A lower-than-expected all-wheat ending stocks estimate from Statistics Canada should help boost prices, a CBOT floor trader said. Statistics Canada sees stocks as of Dec. 31 at 15.147 million tonnes, below analysts' estimates of 16 million to 16.9 million.

 

The forecast is "outright bullish," the CBOT trader said. It does not seem as though the lower-than-expected estimate is already built into the markets, he said.

 

CBOT wheat bulls' next upside price objective is to push and close the March contract above strong technical resistance at last week's high of US$9.92 1/2, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$9.30, he said.

 

First resistance is seen at US$9.80 and then at US$9.86. First support lies at Monday's low of US$9.52 and then at US$9.40.

 

At the KCBT, bulls' next upside price objective is pushing and closing March wheat above solid technical 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$9.97 1/2, which would fill on the downside Monday's upside price gap on the daily chart, he said.

 

First resistance is seen at US$10.33 and then at US$10.50. First support is seen at Monday's low of US$10.03 and then at US$9.97 1/4.