March 12, 2007

 

US Wheat Outlook on Monday: 1-2 cents lower on overnight follow-through

 

 

U.S. wheat futures are expected to start Monday's day session on the defensive, with some follow-through selling from slight declines overnight and amid an absence of supportive new inputs, traders said.

 

Benchmark Chicago Board of Trade May wheat is called to open down 1 to 2 cents per bushel.

 

In e-cbot trading, CBOT May wheat fell 1 1/4 cents to US$4.75 1/4.

 

There is little fresh news out for wheat, and the lack of new inputs limited activity in overnight trading, a floor trader said. Neighboring CBOT corn and soybean futures also slipped overnight and will likely add to the weaker tone, he noted.

 

CBOT May wheat prices on Friday closed firmer and near mid-range, although some near-term technical damage has occurred recently, a technical analyst added.

 

The next downside price objective for the bears is closing May wheat prices below solid support at last week's low of US$4.67 1/4, he said.. The bulls' next upside price objective is to close prices above solid resistance at US$4.85.

 

First resistance is seen at Friday's high of US$4.82 and then at US$4.85. First support lies at Friday's low of US$4.72 and then at US$4.70.

 

There are few serious concerns about growing conditions at the moment, a CBOT floor broker said.

 

DTN Meteorlogix reported weekend rain and warm temperatures will favor early developing wheat in the U.S. Southern Plains. In the eastern Midwest and Delta, scattered rains and warm temperatures will favor wheat, the weather firm added.

 

In China, meanwhile, recent rains will provide favorable conditions for wheat development after a cold outbreak weakens, Meteorlogix reported.

 

Wheat prices in China remained largely stable in the week to Monday, with only those in Shandong province rising slightly on expected lower output there this year. An earlier drought and sudden snowfall in early March led to market speculation of lower output in Shandong this year, an analyst said.

 

In Shandong, a major wheat-growing province, prices of average-quality wheat rose by about RMB20 from a week ago to RMB1,560-RMB1,600 a metric tonne. Market participants said flour mills in the province have been speeding up buying amid concern that prices will rise further.

 

In other news, large speculative traders trimmed their long CBOT wheat futures and options positions by 12,341 contracts, while lifting their short positions by 1,523 contracts, the Commodity Futures Trading Commission reported Friday afternoon. They were net short 12,517 contracts as of March 6, the CFTC said.

 

Large commercial traders increased their long CBOT futures and options positions by 1,482 contracts and decreased their short holdings by 11,804 contracts. The commercials were net short 157,480 futures and options contracts.

 

At the Kansas City Board of Trade, large speculative traders added 614 contracts to their long wheat futures and options positions, trimmed their short positions by 703 contracts and were net long 30,151 contracts, according to the CFTC. Large commercial traders were net short 48,183 contracts at KCBT. They cut their long positions by 1,191 contracts and their short positions by 570 contracts.

 

Deliveries posted against the CBOT March wheat future totaled 12 contracts. Man Financial Inc issued 10 contracts, while the Astro Division of UBS Securities stopped 9 contracts. The last trade assigned was March 7.