March 13, 2008

 

US Wheat Outlook on Thursday: Weaker on profit-taking, overnight

 

 

Profit-taking is expected to push U.S. wheat futures mostly lower at the start of Thursday's day session, traders said.

 

Chicago Board of Trade May wheat is called to open 10 to 15 cents lower per bushel. In overnight electronic trading, CBOT May wheat fell 14 3/4 cents to US$12.67 3/4.

 

Kansas City Board of Trade May wheat overnight slipped 13 1/4 cents to US$13.15. Minneapolis Grain Exchange May wheat rose 3 1/4 cents to US$15.20.

 

U.S. wheat futures saw sharp gains the last two days and are due for a pullback, traders said. Expanded daily trading limits for wheat remain in effect at all the exchanges after contracts closed limit up Tuesday. The limits are 90 cents at the CBOT and KCBT, and US$1.35 at the MGE.

 

Record highs in crude oil and gold, along with a weak U.S. dollar, are expected to boost CBOT corn and soybeans, an analyst said. The outside markets also may help underpin wheat a bit, he said.

 

CBOT July wheat, which represents the new soft red winter wheat crop, on Wednesday hit a fresh contract high before closing solidly higher. CBOT wheat bulls have solid upside technical momentum, but the market may run out of steam soon, a technical analyst said.

 

"My bias is that there is not a lot of room left on the upside in the wheat futures market," he said.

 

CBOT bulls' next upside price objective is to push and close July wheat above psychological resistance at US$13.00, the analyst said. The next downside price objective for the bears is pushing and closing prices below psychological support at US$12.00.

 

First resistance is seen at Wednesday's contract high of US$12.70 and then at US$13.00. First support lies at US$12.00 and then at Wednesday's low of US$11.60.

 

At the KCBT, bulls' next upside price objective is pushing and closing July wheat above solid technical resistance at Wednesday's high and the contract high of US$13.00, the analyst said. The bears' next downside objective is pushing and closing prices major psychological support at US$12.00.

 

First resistance is seen at Wednesday's high of US$13.00 and then at US$13.50. First support is seen at US$12.50 and then at US$12.25.

 

Total weekly U.S. wheat export sales, including old crop and new crop business, were 423,200 metric tonnes, within trade estimates of 250,000 tonnes to 750,000 tonnes. The breakdown of sales was almost evenly divided between the old crop and new crop.

 

Net old crop export sales of 210,100 tonnes were 51% below the previous week and 9% under the prior four-week average. Cancellations and buybacks of 111,400 tonnes were considered large, and purchases from foreign sellers were about 30,300 tonnes. Net new crop sales of of 213,100 tonnes were mainly to unknown destinations.

 

In other news, Japan said it bought 142,000 tonnes of wheat, including 67,000 tonnes of U.S. semi-hard wheat, in a weekly tender concluded Thursday. The shipment will arrive between April and June.