March 4, 2008
US Wheat Outlook on Tuesday: Mostly higher on follow-through, demand
U.S. wheat futures are poised to start Tuesday's day session mostly higher on firmer overnight activity and scattered demand news, analysts said.
Chicago Board of Trade May wheat is called to open 8 to 12 cents per bushel higher. In overnight electronic trading, CBOT May wheat rose 12 1/2 cents to US$11.15.
Kansas City Board of Trade May wheat overnight jumped 15 1/2 cents to US$11.86 1/4. Minneapolis Grain Exchange May wheat slipped 3/4 cent to US$15.59.
Nearby MGE March wheat overnight tumbled 80 cents to US$17.80, but there is little interest in trading the contract ahead of expiration, a trader said. At the close of business Friday, open interest in MGE March wheat was 118 contracts and the daily volume was 87 contracts, according to the exchange.
CBOT and KCBT wheat futures ended firmer Monday, while MGE May and July wheat slumped under pressure from late local selling. CBOT and KBCT May wheat Tuesday should feel some early support from follow-through buying and news of import tenders, analysts said.
The Taiwan Flour Millers Association said it bought 75,000 metric tonnes of U.S. No. 1 wheat, including dark northern spring wheat and hard red winter wheat, in a tender concluded Tuesday. The first shipment will arrive in Taiwan between May 9 and May 23, the second shipment will arrive between May 24 and June 7.
Japan said it is seeking 117,000 tonnes of wheat, including 50,000 tonnes of U.S. semi hard wheat and 21,000 tonnes of U.S. western white wheat, in a routine tender to be concluded Thursday. The shipment would arrive between April and June.
Morocco's state wheat buyer said it was tendering to buy 136,050 metric tonnes of soft milling wheat, of any origin, from importers inside the country. The wheat is for delivery before April 1 and will be distributed to 13 regions across the country.
Traders said they expected Morocco's tender could be filled with French wheat. The deadline for bids is March 18.
The Ukrainian government, meanwhile, is scheduled to decide Thursday whether to increase the grain export quotas, the Agriculture Ministry said. A draft decree, to be considered by the cabinet Thursday, provides for the wheat export quota to "symbolically" increase to 203,000 tonnes from 200,000 tonnes. The draft decree also proposes that export quotas should be in effect until June 30 instead of the current date of March 31.
However, there could be some pressure on wheat from a setback in CBOT corn and soybeans, CBOT floor traders said. A broad-based rally in commodities - including new highs in soybeans, soyoil and corn - helped lift wheat higher Monday. Trading could be two-sided in wheat Tuesday depending on what neighboring markets do, a trader said.
CBOT wheat bulls' next upside price objective is to push and close the July future, which represents the new crop, above resistance at Monday's high of US$10.60, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at last week's low of US$9.92, he said.
First resistance is seen at US$10.30 and then at US$10.50. First support lies at Monday's low of US$10.15 and then at US$10.00.
At the KCBT, bulls' next upside price objective is pushing and closing July wheat above solid resistance at Monday's high of US$11.50, the analyst said. The bears' next downside objective is pushing and closing prices below solid support at last week's low of US$10.75.
First resistance is seen at US$11.35 and then at Monday's high of US$11.50. First support is seen at US$10.90 and then at US$10.75.
HRW wheat, traded at the KCBT, could see some more precipitation during the next week. The next chance for precipitation in drier, western wheat areas of the Plains comes during the next six to 10 days, according to DTN Meteorlogix.
In the eastern Midwest and Delta, snow, ice and rain are expected Tuesday through southern and eastern areas. Conditions should then turn drier and then colder during the next three to five days, Meteorlogix said.
