March 13, 2007

 

US Wheat Outlook on Tuesday: Mixed Start; Expected To Follow Corn

 

 

U.S. wheat futures are expected to start Tuesday's day session mixed after inching only slightly higher overnight and without strong leadership in either direction, analysts said.

 

In e-cbot overnight trading, Benchmark Chicago Board of Trade May wheat ended 1/2 cent higher at US$4.71 1/4 a bushel.

 

Wheat futures will likely continue to follow CBOT corn in the near term as market participants await the March 30 release of the U.S. Department of Agriculture' planting intentions and grain stocks report, an analyst said.

 

CBOT May corn slipped 3/4 cent lower overnight.

 

There are few other fresh inputs to direct prices, a CBOT floor trader said. Market movements may depend on whether funds come in as buyers or sellers, he noted.

 

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

 

First resistance is seen at Monday's high of US$4.76 1/2 and then at US$4.80. First support lies at Monday's low of US$4.69 1/2 and then at US$4.67 1/2.

 

Deliveries posted against the CBOT March wheat future totaled 45 contracts. Man Financial Inc was the only issuer. The Astro Division of UBS Securities stopped 39 contracts. The last trade assigned was March 7.

 

At the Kansas City Board of Trade, bulls and bears are on a level near-term technical playing field, but bulls are fading a bit, the analyst said.

 

The bulls' next upside price objective is closing KCBT May prices above solid chart resistance at US$5.10. The bears' next downside objective is closing prices below solid support at US$4.88.

 

First resistance is seen at Monday's high of US$5.01 and then at US$5.05. First support is seen at Monday's low of US$4.96 and then at US$4.90.

 

In Kansas, wheat condition in the week ended March 11 was rated 6% very poor, 6% poor, 28% fair, 45% good, and 15% excellent, according to a weekly crop update. A week earlier, the crop was rated 2% very poor, 5% poor, 29% fair, 49% good and 15% excellent.

 

Recent rainfall and this week's warm temperatures will favor early developing wheat in the U.S. Southern Plains, according to DTN Meteorlogix. Wheat in the eastern Midwest and Delta also will benefit from warm temperatures, the weather firm reported.

 

"Rainfall is not needed and may be unfavorable in areas that are already too wet from early winter rains," the firm said.

 

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

 

In other news, Japan is seeking 116,000 metric tonnes of wheat, including 70,000 tonnes from the U.S., in a routine tender to be concluded Thursday, an agriculture ministry official said. The shipment is expected to arrive in Japan May 1-31.

 

In Egypt, wheat imports are forecast to remain above 7 million tonnes through 2007-08, according to a U.S. Department of Agriculture attach¨¦ report. U.S market share in wheat imports continues to lag historical levels.

 

Boosted by a higher government purchase price, Egypt's wheat area in 2006-07 is estimated to be up about 2%, while another small increase in area is forecast for 2007-08. Egypt's wheat sources are becoming increasingly diverse, and Russia continues to be a favored supplier, according to the report.