February 22, 2007

 

US Wheat Outlook on Thursday: Called 3-5 cents higher on follow through, e-CBOT

 

 

U.S. wheat futures are forecast to start Thursday's day session 3 to 5 cents higher on follow through from Wednesday's gains and the price strength in overnight trading, sources said.

 

In overnight electronic trading, CBOT March wheat gained 5 cents to US$4.81 per bushel, while March KCBT hard red wheat rose 1 1/4 cents to US$5.03.

 

Wheat should start out higher based on follow through from Wednesday as well as the gains set in overnight trade, a floor analyst said. The psychology of the market is that people want to own the grains, he added.

 

The market is currently being driven by technical factors and fund short covering, a floor trader said. There is litte fundamental news out, so a lot depends on the price direction of corn and soybeans, which were higher overnight and should support wheat as well, he said. It will be hard for wheat to trade lower if corn is higher, he added.

 

In the U.S. Midwest soft red winter wheat belt, snow and rain showers are expected Friday and Saturday in the west, with amounts of 0.50-1.50 inches, DTN Meteorologix Weather said. Dry weather is forecast for much of Friday in eastern sections of the region with rain or snow developing Friday night into Saturday with amounts of 0.50-1.50 inches possible, DTN Meteorologix Weather said. Temperatures are expected to average near-to-above normal Friday and near-to-below normal north and near-to-above normal south Saturday.

 

In the U.S. hard red winter wheat belt, dry weather is forecast early Friday with a chance for showers possibly developing later Friday and changing to snow north and thunderstorms east Friday night into Saturday, Meteorologix Weather said. Precipitation should average 0.10-0.50 inch west and 0.50-1.50 inches in central and eastern areas. Temperatures are expected to average above normal Friday and near-to-above normal Saturday.

 

On daily open auction technical charts, CBOT May wheat settled nearer the session high and traded at a fresh four-week high, a market technician said. The bulls' next upside objective is closing prices above solid resistance at US$5.00 per bushel, he said. The next downside objective is closing prices below US$4.75 per bushel.

 

First resistance for CBOT May is seen at Wednesday's high of US$4.93, and then at US$4.95. First support is seen at US$4.85, and then at US$4.80.

 

May KCBT also settled at a four-week high and the bulls are regaining fresh technical momentum, the technician said. The bulls' next upside price objective is closing prices above resistance at US$5.17 1/2 per bushel while the bears' next downside objective is closing prices below solid support at US$5.00.

 

First resistance for KCBT May is seen at US$5.12 and then at US$5.17 1/2. First support is seen at US$5.05 and then at US$5.00.

 

In other wheat news, Japan bought 70,000 metric tonnes of U.S. wheat in its weekly wheat tender, sources said.

 

The U.S. Department of Agriculture's weekly export sales report, normally due out Thursday, is scheduled to be released Friday at 8:30 a.m. EST (1330 GMT) due to Monday's holiday.