February 22, 2006

 

US Wheat Outlook on Wednesday: Flat-down 2 cents on profit taking, e-CBOT

 

 

Wheat futures at the Chicago Board of Trade are forecast to start Wednesday's session flat to two cents lower on profit taking after recent gains and lower prices overnight, sources said.

 

News that Iraq would purchase 1.5 million metric tonnes of U.S. and Canadian wheat was viewed as supportive by traders, though several noted the key was how much wheat would be of U.S. origin.

 

In overnight e-CBOT trading, March wheat declined 2 1/2 cents to US$3.70 per bushel, May fell 3 3/4 cents to US$3.80 1/4, and July fell 2 3/4 cents to US$3.90 1/2.

 

Overnight at the KCBT, March wheat slipped 1/2 cent to US$4.39 1/2, and May declined 1 cent to US$4.45.

 

Wheat futures should open lower but market direction depends on the funds and where they want to go, a floor trader said.

 

After recent rallies to new contract highs, the market could see some profit taking. However, without any rain it will be hard for the market to break, a commission house broker said.

 

"Until it starts to rain, KCBT wheat will be tough to break," he said.

 

There is a chance for sprinkles or light showers through central Texas over the next few days with mainly dry conditions elsewhere in the Central and Southern Plains, DTN weather said. Dry conditions are expected to continue through the weekend with temperatures near to above normal Wednesday and Thursday and above normal in most sections of the over the next several days.

 

On technical charts, the next major price objective for the bulls is closing above the US$4.00 level in CBOT May wheat, a market technician said. First resistance is seen at US$3.88, the contract high set on Tuesday and then at US$3.90. First support is at US$3.79 and then at US$3.76.

 

May KCBT hit another new contract high Tuesday and the next upside price objective is to close prices above the US$4.50 resistance level. First resistance is pegged at US$4.50 1/2, Tuesday's contract high and then at US$4.55. First support is seen at US$4.42, Tuesday's low and then at US$4.39.

 

Cash wheat basis bids were unchanged to lower Wednesday morning. Soft red wheat basis bids were unchanged to lower with Cincinnati unchanged at 7 cents under CBOT March.

 

Hard red winter wheat basis bids were unchanged to lower with Manhattan, Kansas, unchanged at 15 cents under KCBT March wheat.

 

Spring wheat basis bids were mostly unchanged with Minot, N.D., 1 cent higher at 25 cents under MGE March futures.

 

In other wheat news, India, which recently announced a tender to import 500,000 metric tonnes of wheat, has high quality standards for the imports which may limit the number of bidders to supply the amount, sources said.

 

The Kansas City Board of Trade reported that wheat futures traded at record volumes Tuesday. Based on preliminary volume and open interest, KCBT traded 35,154 contracts, a new volume record.