March 25, 2008

 

US Wheat Outlook on Tuesday: Seen firmer on follow-through, spillover

 

 

U.S. wheat futures are poised to start Tuesday's day session higher on firmer overnight trade, spillover support and in a continued correction from weakness last week, traders said.

 

Benchmark Chicago Board of Trade May wheat is called to open 15 to 25 cents per bushel higher. In overnight electronic trading, CBOT May wheat ended up 24 cents at US$10.44.

 

Kansas City Board of Trade May wheat overnight was up 22 1/2 cents at US$10.91. Minneapolis Grain Exchange May wheat was down 3/4 cent at US$13.18 1/2.

 

Follow-through buying should show up at the opening of trading as the markets continue to rebound from heavy losses last week, a CBOT floor broker said. Borrowed strength from outside and neighboring markets also should boost wheat amid a lack of fresh fundamental news, he said.

 

"We'll see what the money flows want to do," a CBOT trader said.

 

The U.S. Department of Agriculture is slated to issue its prospective plantings estimates Monday, and the markets could start to see some positioning ahead of the release, an analyst said. Traders are waiting for the estimates to come out and watching the weather, he said.

 

There are ongoing concerns about dryness in winter wheat areas of the U.S. Plains. More moisture is needed in the region as the crop continues to develop, DTN Meteorlogix said.

 

A wet weather pattern should remain in place over the eastern and southern Midwest, Meteorlogix said. The Delta does not look to be very wet during the next five days, but it may get wetter again during the six-to-10 day period, the private weather firm said.

 

In other news, Morocco's state wheat buyer said Tuesday it bought 111,630 metric tonnes of soft milling wheat of any origin from importers inside the country. Delivery is expected before April 1.

 

Japan, meanwhile, said it won't hold a weekly tender for importing wheat this week. That news was seen as bearish for MGE wheat futures as Japan often buys spring wheat, traded at the MGE, a trader said.

 

Bulls' next upside price objective is to push and close CBOT July wheat above solid resistance at Monday's high of US$10.53, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$9.60 1/2, he said.

 

First resistance is seen at US$10.53 and then at US$10.78. First support lies at US$10.00 and then at Monday's low of US$9.90.

 

At the KCBT, bulls' next upside price objective is pushing and closing July wheat above psychological resistance at US$11.00, the technical analyst said. The bears' next downside objective is pushing and closing prices below solid support at last week's low of US$10.00.

 

First resistance is seen at Monday's high of US$10.90 and then at US$11.00. First support is seen at US$10.50 and then at Monday's low of US$10.30.