March 20, 2007

 

US Wheat Outlook on Tuesday: Mixed; waiting for Egypt tender results

 

 

U.S. wheat futures are expected to start Tuesday's day session mixed with little strong direction seen from overnight activity and traders waiting for the results of an Egyptian tender, analysts said.

 

In e-cbot trading, Chicago Board of Trade May wheat rose 1 1/2 cents to US$4.56 1/2 per bushel. The overnight electronic gains, however, were considered to be "just a correction" to losses Tuesday as CBOT July wheat was down 2 cents at US$4.68, a CBOT floor trader said.

 

Market participants are waiting to see the results of a wheat tender from Egypt's General Authority for Supply Commodities for at least 55,000 to 60,000 metric tonnes, traders and analysts said. The tender is for shipment April 16 to 30.

 

GASC is looking to purchase 55,000-60,000 tonnes of U.S. hard red winter wheat, U.S. soft red wheat, U.S. soft white wheat, French milling wheat, Argentine wheat, or Kazakhstan wheat, and 25,000-60,000 tonnes of Russian, German, U.K., or Syrian wheat, an official said.

 

GASC also announced a tender for a minimum of 10,000 tonnes of wheat, of the same origins stated above, from local suppliers to be paid for in Egyptian pounds on the basis of landed cost out of the free-zone areas, the official said.

 

A strong sale by the U.S. would be supportive to early price action, although a small sale could be seen as negative, a CBOT floor trader said.

 

Otherwise, there is little fresh news out to impact trading, and wheat will continue to look to the CBOT corn and soybean markets for direction, analysts said.

 

Moisture in the U.S. Southern Plains continues to look favorable for hard red winter wheat crops and bearish for prices, analysts said. DTN Meteorlogix reported episodes of showers and thundershowers should continue in the area for the next five to seven days.

 

There are some concerns about heavy rains in wheat-growing areas of northern India, a CBOT floor broker noted.

 

Technically, bears have downside technical power at CBOT and the Kansas City Board of Trade, a technical analyst said.

 

The next downside price objective for the bears is closing CBOT May prices below solid support at US$4.50. The bulls' next upside price objective is to close prices above solid resistance at US$4.75.

 

First resistance is seen at Monday's high of US$4.61 and then at US$4.65. First support lies at Monday's low of US$4.52 and then at US$4.50.

 

At KCBT, the bears' next downside objective is closing May prices below solid support at the January low of US$4.75 1/2. The bulls' next upside price objective is closing prices above solid chart resistance at US$5.00.

 

First resistance is seen at US$4.85 and then at US$4.88. First support is seen at Monday's low of US$4.76 and then at US$4.75 1/2.

 

In other news, Syria's General Establishment for Cereal Processing and Trade, or Hoboob, said Tuesday it was tendering to sell 100,000 metric tonnes of durum wheat.

 

Australian agribusiness AWB Ltd.'s (AWB.AU) Geneva-based grain trading office, meanwhile, has bought small quantities of Pakistani wheat in bags and containers for export to several Asian markets, a company spokesman said. AWB has only limited tonnages of Australian wheat available after a severe drought in 2006 slashed domestic production and export availability, he said.