April 25, 2007

 

US Wheat Outlook on Wednesday: Up 2-4 cents following overnight theme

 

 

U.S. wheat futures are expected to start Wednesday's day session activity 2-to-4 cents higher, following the tone established in overnight trading, a commission house analyst said.

 

In overnight electronic trading, CBOT July wheat gained 2 cents to US$4.99 1/2 per bushel, while July KCBT hard red rose 1/2 cent to US$4.89 3/4.

 

Followthrough from the steady tone in overnight activity should provide support for prices at the opening the analyst said. In addition, wheat could see further support on ideas recent losses were overdone and the firm start expected in neighboring corn futures, the analyst added. However, there is lack of fresh news which should limit market volatility, he added.

 

In the U.S. Midwest soft red winter wheat belt, widespread rains and possible thunderstorms are expected Wednesday and Thursday with rainfall averaging .75-2.50 inches during this period, DTN Meteorologix Weather said. Temperatures are expected to average near-to-mostly below normal Wednesday and Thursday.

 

In the U.S. hard red winter wheat belt, periods of rain with amounts of up to 1.00 inch is possible Wednesday and into Thursday before drier weather returns late Thursday and into Friday, DTN Meteorologix Weather says. Temperatures are expected to average near-to-mostly-below normal in much of the region.

 

On daily open auction technical charts, CBOT July wheat gapped open lower on the daily bar charts. Bulls still have the near-term technical advantage but it is fading, a technical analyst said.

 

First resistance is seen at Tuesday's high of US$5.00 and then at US$5.03 1/2. First support is pegged at US$4.93 and then at US$4.90.

 

July KCBT also gapped open lower and closed nearer the session low on profit taking, the analyst said.

 

First resistance is seen at US$4.93 and then at US$4.99. First support is seen at US$4.87, Tuesday's low and then at US$4.83.

 

In other wheat news, India's government has purchased 6.76 million metric tonnes of domestic wheat as of Wednesday, down 18% from the 8.2 million tonnes purchased a year earlier, a senior government official said.

 

In India, the size of wheat imports depends on the amount of wheat bought by the government from farmers. Last year's decline in government purchases led to India importing 5.5 million metric tonnes to meet local needs.