March 21, 2007

 

US Wheat Outlook on Wednesday: Firmer start following gains overnight

 

 

U.S. wheat futures are expected to start Wednesday's day session firmer on follow-through buying from higher overnight trading and with support from neighboring markets, traders said.

 

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

 

In e-cbot trading, CBOT May wheat ended 1 1/4 cent higher at US$4.64.

 

There is little fresh news out for wheat, and prices will likely take their cue from the overnight gains, a CBOT floor broker said. Trading is expected to remain choppy as market participants bide their time before the release of the U.S. Department of Agriculture's planting intentions and grain stocks report on March 30.

 

Wheat futures also are expected to continue to look to the neighboring CBOT corn market for direction, floor traders added.

 

Technically, bears still have the slight near-term advantage, a market technician said.

 

The next downside price objective for the bears is closing CBOT May wheat prices below solid support at this week's low of US$4.52. The bulls' next upside price objective is to close prices above solid resistance at US$4.75.

 

First resistance is seen at Tuesday's high of US$4.64 and then at US$4.67. First support lies at US$4.60 and then at US$4.58 1/2.

 

At the Kansas City Board of Trades, 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 Tuesday's high of US$4.85 and then at US$4.88. First support is seen at US$4.80 and then at this week's low of US$4.76.

 

Weather forecasts for U.S. hard red winter wheat areas remain favorable, which is bearish for prices, analysts said.

 

Episodes of showers and thundershowers are expected for the next five days in the Southern Plains, according to DTN Meteorlogix. They should provide "very favorable moisture" for early developing wheat, the weather firm said.

 

In the eastern Midwest and Delta, moderate to heavy rainfall is possible through the eastern Midwest part of the region during the next few days, Meteorlogix reported.

 

Recent rainfall in China, meanwhile, has provided favorable soil moisture for wheat areas, according to the firm. Warmer temperatures during this week will promote development of this crop, Meteorlogix said.

 

In other news, Japan's Ministry of Agriculture has completed its wheat import program for this financial year ending March 31. It is unclear whether the ministry will resume weekly wheat import tenders from the start of the next year itself, without waiting for prices to come down, analysts said.

 

The USDA on Thursday is scheduled to release weekly U.S. wheat export sales data for the week ended March 15.