February 28, 2007

 

US Wheat Outlook on Wednesday: Up 2-3 cents, stabilizing after Tuesday's losses

 

 

U.S. wheat futures are expected to begin day session trading 2 to 3 cents higher Wednesday as steady prices overnight and ideas recent losses were overdone and due for a bounce should supply support, a floor analyst said.

 

In overnight electronic trading, CBOT March wheat rose 1 1/2 cents to US$4.71 3/4 per bushel, while March KCBT hard red wheat gained 1 cent to US$4.98 1/2.

 

Wheat should open a little higher after two days of price weakness, and see a little bit of a bounce, a commission house analyst said.

 

However, gold, silver and crude oil are all lower and could spill over into the grain markets, and deliveries were heavier than expected, he added.

 

Deliveries posted against the March future were 3,667 contracts. Large issuers included the customer account of the Astro division of UBS Securities which issued 2,190 contracts, and the customer account of Bank of America which issued 932 contracts. Large stoppers included the customer account of Goldman Sachs, which stopped 1,033 contracts, and the customer account of Kottke, which stopped 416 contracts. The last trade date assigned was Feb. 26.

 

In the U.S. Midwest, soft red winter wheat belt, snow, ice and rain are forecast for Thursday, with snow showers expected Friday in western sections of the region, DTN Meteorologix Weather said. Precipitation should average 0.50-1.25 inch.

 

In the eastern half of the region, snow, ice and rain are forecast for Thursday with rain or thundershowers possibly changing to snow showers late Thursday into Friday, Meteorologix said. Very windy weather should accompany the moisture, which should average 0.50-1.25 inch. Temperatures in the western half of the region are expected near-to-below normal Thursday and below normal Friday, while in the eastern sections, temperatures are expected mostly above normal Thursday and near-to-below normal Friday.

 

In the U.S. hard red winter wheat belt, there is a chance for some light snow showers early Thursday with mainly dry weather Friday, DTN Meteorologix Weather said. Temperatures are forecast to average near-to-below normal Thursday.

 

On daily open auction technical charts, CBOT May wheat gapped open lower Tuesday, but closed near the session high. Despite this, some technical damage did occur, a technical analyst said. The bulls' next upside price objective is closing prices above solid resistance in May at US$4.95 1/2, while the bears next downside price objective is closing prices beneath Tuesday's low of US$4.68.

 

First resistance for CBOT May is seen at US$4.85, and then at US$4.90. First support is seen at US$4.80, and then at US$4.75.

 

May KCBT also gapped lower but did close near the session high, the analyst said. The bulls' next upside price objective is closing prices above solid chart resistance at this week's high of US$5.24 while the bears' next downside objective is closing prices below solid support at US$5.00.

 

First resistance for KCBT May is seen at Tuesday's high of US$5.11 and then at US$5.14. First support is seen at US$5.05 and then at US$5.00.

 

In other wheat news, India's government has banned wheat futures trading in the country in an attempt to cool off inflationary food pressures in the country.

 

China exported 165,371 metric tonnes of wheat and imported 17,103 tonnes in January, the country's General Administration of Customs reported Wednesday.