February 26, 2007

 

US Wheat Outlook on Monday: Called 7-8 cents higher on e-CBOT, technicals

 

 

U.S. wheat futures are forecast to start Monday's trade 7-to-8 cents higher, following the gains established in overnight activity and expected technical strength, a CBOT floor analyst said.

 

In overnight electronic trading, CBOT March wheat gained 8 3/4 cents to US$4.93 per bushel, while March KCBT hard red wheat rose 5 1/2 cents to US$5.12.

 

Wheat could not extend Friday's weakness in overnight trade and prices rallied as a result, the floor analyst said.

 

Technically, the market remains strong and the inability of the market to break Friday is setting up a stronger start Monday, a commission house trader said. Export news out over the weekend was not favorable to U.S. wheat exports but some people are concerned about the additional moisture the soft red winter wheat belt received over the weekend, the commission house trader said.

 

In the U.S. Midwest soft red winter wheat belt, mainly dry weather is forecast Tuesday with a chance for precipitation west on Wednesday, DTN Meteorologix Weather said. Temperatures are expected to average near-to-below normal west and near-to-above normal east in the period, DTN Meteorologix Weather said.

 

In the U.S. hard red winter wheat belt, mainly dry conditions are forecast for Tuesday with light precipitation with less than .25 inch is possible Wednesday. Temperatures are expected to average near-to-below normal, DTN Meteorologix said.

 

On daily open auction technical charts, CBOT May wheat closed nearer the session low Friday on light profit-taking pressure from recent solid gains, a technical analyst said. The bulls still have good upside technical momentum and their next upside price objective is closing prices above US$5.10 per bushel. The bears' next downside price objective is closing prices below solid support at US$4.85 per bushel.

 

First resistance for CBOT May is seen at last week's high of US$5.04, and then at US$5.10. First support is seen at US$4.98, and then at US$4.95, the analyst said.

 

May KCBT also closed lower on profit-taking pressure from recent gains. The bulls' next upside price objective is closing prices above resistance at US$5.30 per bushel while the bears' next downside objective is closing prices below solid support at US$5.05.

 

First resistance for KCBT May is seen at US$5.20 and then at US$5.25. First support is seen at US$5.14 and then at US$5.10.

 

Index funds trimmed their long CBOT wheat futures and options on futures positions by 2,584 contracts while reducing their short positions by 326 contracts and are now overall net long 192,338 contracts as of Feb. 20, the Commodity Futures Trading Commission reported Friday. Large commercial traders cut their short holdings by 4,662 contracts and their long positions by 3,737 contracts and are now net short 157,025 futures and options on futures contracts.

 

At the KCBT, large commercial traders reduced their long positions by 3,095 contracts and added 754 contracts to their short positions and are now net short 43,251 futures and options on futures contracts, the CFTC reported.

 

In other wheat news, Australian farmers could produce a bumper wheat crop in 2007 as the drought that cut production by more than 60% in 2006 appears to be easing, said Murray Jones, president of the Grains Council of Australia, a grower lobby.

 

Egypt purchased 134,000 metric tonnes of Russian wheat over the weekend, the country's General Authority for Supply Commodities said.

 

Wheat prices in China are seen remaining stable as farmers are expected to remain on holiday until early March after the Lantern Festival, Chinese sources said.

 

Monday morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 11:00 a.m. EST (1600 GMT).