April 4, 2007

 

US Wheat Outlook on Wednesday: 5-6 cents up in recovery, following overnight

 

 

U.S. wheat futures are expected to start Wednesday's day session firmer on overnight gains and in a recovery from recent losses, traders and analysts said.

 

Benchmark Chicago Board of Trade May wheat is called to open 5 to 6 cents higher per bushel.

 

In e-cbot trading, CBOT May wheat was up 6 1/4 cents at US$4.25 1/4.

 

Wheat futures have been hit hard in the last several days amid weakness in the neighboring CBOT corn market and are due for a bounce, analysts said. Corn also trended higher overnight and should lend some upside support, they added.

 

There are some bullish ideas that recent price breaks in wheat will attract fresh export business, an analyst said. A news report, citing European traders, said Iraq's state grain board issued a tender to buy 50,000 tonnes of hard wheat from the U.S. or Canada for April to May shipment. The volume was said to be nominal and subject to negotiation.

 

There are some minor concerns about frigid weather expected to hit wheat-growing areas of the U.S. Plains this weekend, although the hard red winter wheat crop is in generally good condition, a CBOT floor trader said.

 

In the Southern Plains, colder weather during the next four to five days may bring a frost or light freeze to areas as far south as southern Oklahoma, according to DTN Meteorlogix. Frigid temperatures in the eastern Midwest also could set back development of wheat, the weather firm reported.

 

In some areas of the Delta, a hard freeze is possible and would "impact any wheat that is in late jointing stages or flowering," according to the weather firm.

 

Major winter wheat areas of the Ukraine have be drier and warmer recently, conditions that favor early spring field work and greening of wheat, Meteorlogix said. In the coming weeks, however, rain will be needed to support favorable development of the crop, the firm noted. The five-day forecast calls for mainly dry conditions.

 

Looking at the technical picture for wheat, bears have the solid near-term advantage, a technical analyst said.

 

The next downside price objective for the bears is closing prices below solid support at the August 2006 low of US$4.04 1/2, the analyst said. The bulls' next upside price objective is to close prices above solid resistance at US$4.55, which would fill on the upside last Friday's downside price gap on the daily bar chart.

 

First resistance is seen US$4.25 and then at Tuesday's high of US$4.31. First support lies at Tuesday's low of US$4.18 and then at this week's low of US$4.12.

 

At the Kansas City Board of Trade, the bears' next downside objective is closing prices below solid support at this week's low of US$4.33. The bulls' next upside price objective is closing prices above solid chart resistance at US$4.66, which would fill on the upside last Friday's downside price gap on the daily bar chart.

 

First resistance is seen at US$4.50 and then at this week's high of US$4.54 1/2. First support is seen at US$4.40 and then at this week's low of US$4.33.

 

In other news, India on Wednesday upwardly revised its wheat crop output estimate for the July 2006-June 2007 crop year to 73.7 million metric tonnes from a previous estimate of 72.5 million tonnes, the agriculture secretary said.

 

Brazil, meanwhile, will have a two-million-metric-tonne wheat shortfall in 2007, the president of one of Brazil's biggest wheat millers said. Most of Brazil's wheat supply comes from Argentina, and officials are trying to convince Argentine wheat exporters and the government to remove a temporary ban on wheat exports.