April 23, 2007

 

US Wheat Outlook on Monday: 3-5 cents lower on e-CBOT, lacking fresh inputs

 

 

U.S. wheat futures are expected to start Monday's day session trading 3 to 5 cents lower, following the tone established in overnight activity and the lack of fresh inputs, a floor analyst said.

 

In overnight electronic trading, CBOT July wheat fell 4 cents to US$5.10 3/4 per bushel, while July KCBT hard red wheat also declined 4 cents to US$5.06 1/2.

 

Wheat should follow the overnight trend as the lack of fresh inputs is expected to weigh on prices, a commercial analyst said.

 

U.S. weekly wheat crop conditions are expected to decline another 3 to 6 percentage points in the good-to-excellent category, but no one really knows the extent of the damage, the analyst added. The market won't know how much of the crop has been damaged until later, he added.

 

In the U.S. Midwest soft red winter wheat belt, widespread rains and possible thunderstorms are possible Tuesday through Wednesday with rainfall averaging 0.75-2.50 inches during this period, DTN Meteorologix Weather said. Temperatures are expected to average above normal Tuesday and below normal Wednesday.

 

In the U.S. hard red winter wheat belt there is a chance for scattered showers and thunderstorms with amounts 0.50-1.50 inches and locally heavier Tuesday into Wednesday, Meteorologix Weather said. Temperatures are expected to average near-to-above normal Tuesday and Wednesday.

 

On daily open auction technical charts, CBOT July wheat closed at the weekly high and hit a new two-month high with market bulls gaining solid upside technical momentum, a technical analyst said.

 

First resistance is seen at Friday's high of US$5.16 and then at US$5.18. First support is pegged at US$5.03 and then at US$5.00.

 

July KCBT hit a fresh six-week high on daily technical charts. The bull's next upside technical objective is closing prices above solid technical resistance at the contract high of US$5.27 per bushel. First resistance is seen at Friday's high of US$5.11 and then at US$5.17. First support is seen at US$5.05 and then at US$5.00.

 

Large commercial traders cut their long CBOT wheat futures and options on futures by 13,809 contracts and added 1,558 contracts to their short positions and are now overall net short 151,354 contracts, the CFTC reported Friday.

 

Large speculative traders reduced their short futures and options on futures by 15,549 contracts and increased their long positions by 2,067 contracts and are now net long 12,705 contracts as of April 17, the CFTC said.

 

At the KCBT, large speculative traders reduced their long futures and options on futures by 3,784 commercial traders while increasing their short positions by 1,965 contracts and

 

In other wheat news, China's wheat prices were mostly stable in the week to Monday as supply and demand were balanced, Chinese traders said.

 

India's federal government 2007 wheat purchases from local farmers were down 18.3% from last year at 5.8 million metric tonnes as increased manual harvesting by farmers and fewer sales by producers is contributing to the lower amount of purchases, a senior government official said.

 

Monday afternoon the U.S. Department of Agriculture is scheduled to release the weekly crop progress report at 4:00 p.m. EDT (2000 GMT).