February 12, 2007

 

US Wheat Outlook on Monday: Up 1/2-1 cent on steady tone in overnight trade

  

 

U.S. wheat futures are predicted to start Monday's day session trading 1/2 to 1 cent higher, underpinned by a steady tone in overnight activity with wheat expected to take its cues from corn for price direction, sources said. In overnight electronic trading, CBOT March wheat gained 1 1/4 cents to US$4.61 1/2, while March KCBT hard red wheat ended up 1 cent to US$4.86.

 

Wheat should be supported by light speculative interest, a commission house broker said. The market continues to be supported by speculative interest in grains in general, he added.

 

There was little fresh news out overnight, so wheat will follow corn for price direction, a cash connected trader said. Recent export activity has been "solid" but nothing to write home about and the outside markets could also influence price activity, he added.

 

Index funds increased their long CBOT wheat futures and options on futures positions by 5,141 contracts and added 2,004 contracts to their short positions and are now overall net long 194,565 contracts, the Commodity Futures Trading Commission reported Friday.

 

Large non-commercial traders increased their long holdings by 1,669 contracts and added 3,606 contracts to their short positions and are now net short 16,188 futures and options on futures contracts.

 

At the KCBT, large commercial traders added 2,908 contracts to their short positions while adding 1,846 contracts to their long positions and are now net short 39,305 futures and options on futures, the CFTC reported.

 

On daily open auction technical charts, CBOT March wheat closed near the session low and remains in a 4-month old down-trend on daily bar charts, a technical analyst said.

 

First resistance for CBOT March is seen at Friday'shigh of US$4.65 and then at US$4.70. First support is pegged at Friday's low of US$4.57 and then at last week's low of US$4.49.

 

March KCBT wheat prices closed nearer the session low Friday and market bears' next downside objective is closing prices below solid support at US$4.74 per bushel, the analyst said.

 

First resistance for KCBT March is seen at US$4.90, and then at US$4.95, Friday's high. First support is seen at US$4.82 and then at US$4.74.

 

In other wheat news, India plans to purchase 15 million metric tonnes of wheat from local farmers in 2007, a senior Indian government official said Monday. India bought only 9.2 million tonnes from local farmers in 2006 and had to import wheat to secure enough supplies. If the government is able to meet its procurement requirement for 2007, it may not need to import any wheat at all, analysts said.

 

Currently, India estimates its 2006-07 wheat production at 72.5 million metric tonnes, up from the 69.48 million tonnes produced last year.

 

Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report for the week ended Feb. 8 at 11:00 a.m. EST (1700 GMT).