March 6, 2007

 

US Wheat Outlook on Tuesday: 1-2 cents higher on follow through, steady e-CBOT

 

 

U.S. wheat futures are expected to begin Tuesday's day session trade 1 to 2 cents higher as follow through from Monday's gains and firm prices in overnight activity are expected to support the market, analysts said.

 

In overnight electronic trading, CBOT May wheat gained 3/4 cent to US$4.81 1/2 per bushel, while May KCBT hard red wheat ended up 1/4 cent at US$5.08 1/4.

 

Follow through strength from Monday's close and the steady prices in overnight activity should support prices, a floor analyst said.

 

In addition, metals and energy prices are higher and the equity markets are firm which should also help the market stabilize after recent commodity liquidation, the analyst added.

 

Wheat could also see some short covering ahead of Friday's U.S. Department of Agriculture's supply and demand report, a floor trader said.

 

In the U.S. Midwest soft red winter wheat belt, mainly dry weather is forecast thru Thursday in the region with a few light snow or rain showers possible in the western sections, DTN Meteorologix Weather said. Temperatures are expected to average below normal.

 

In the U.S. hard red winter wheat belt, mainly dry conditions are expected Wednesday and Thursday, Meteorologix Weather said. Temperatures are expected to average near-to-below normal north and above normal south Wednesday and above normal on Thursday.

 

On daily open auction technical charts, CBOT May wheat ended near the session high on short covering but some technical chart damage has recently occurred, a technical analyst said. The bulls' next upside price objective remains closing prices above US$4.95 1/2 per bushel which would fill to the upside last Tuesday's downside price gap, while the next downside objective for the bears is closing prices below Monday's low of US$4.67 1/4.

 

First resistance is seen at US$4.85 and then at US$4.90. First support is seen at US$4.75 and then at US$4.70.

 

May KCBT settled near the session high and traded a mildly bullish "outside" day on the daily bar chart, the analyst said. First resistance is seen at US$5.09 and then at US$5.15. First support lies at US$5.00 and then at US$4.95.

 

Deliveries posted against the March future were 1,706 contracts. Large issuers included the customer account of the USA Blue division of Man Financial, which issued 543 contracts and the customer account of Man Professional Clearing, which issued 428 contracts. Large stoppers included the customer account of the Astro division of UBS Securities, which stopped 487 contracts and the customer account of Dorman Trading, which stopped 223 contracts. The last trade assigned was Mar. 5.

 

In other wheat news, wheat production in Henan, China's largest wheat producing province may not match that of a year ago, a senior provincial official said Tuesday. Overall conditions are good but there is drought in some places that might affect production, the official said.

 

Changing weather patterns in Australia have been encouraging to some and may lead to a rebound in wheat production in that country after a drought ravaged production last year, Australian officials said.

 

The Australian Bureau of Agricultural & Resource Economics or Abare, forecast wheat production next year at 25 million metric tonnes, up from 9.8 million this year.

 

Taiwan's Flour Million Association bought 41,370 metric tonnes of U.S. wheat in a tender concluded Tuesday, an association official said.

 

The Korea Flour Milling company purchased 20,500 metric tonnes of U.S. wheat from Toepher in a tender concluded Tuesday, a company official said.

 

Japan's Agriculture Ministry is seeking to purchase 125,000 metric tonnes of wheat in a tender to be concluded Thursday, an agriculture ministry official said Tuesday.