May 23, 2007

 

US Wheat Outlook on Wednesday: 3-5 cents up to start, trailing e-CBOT gains

 

 

Overnight gains and firmness in neighboring markets are expected to push U.S. wheat futures to start Wednesday's day session 3-5 cents higher per bushel, analysts said.

 

In e-cbot trading, Chicago Board of Trade July wheat finished up 5 3/4 cents at US$4.76 3/4.

 

There should be some follow-through buying, and then wheat will likely look to activity in the CBOT corn and soybean markets for direction, analysts said.

 

"Wheat futures have turned into a follower of corn and soybeans," a technical analyst said.

 

There also could be some modest support from concerns that wetness in Texas and Oklahoma is delaying early harvest, a CBOT floor trader said. Wet weather in other parts of the U.S. Southern Plains is unfavorable to the developing and maturing winter wheat crop and will increase disease issues, according to DTN Meteorlogix.

 

Seasonal pressure from the beginning harvest will continue to act as an "anchor" on prices, a CBOT floor broker said. On the technical chart, CBOT July prices are also still in a solid downtrend from the late-April contract high, the technical analyst said.

 

Bulls' next upside price objective is to close prices above solid resistance at US$4.90, the technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$4.65.

 

First resistance is seen at US$4.75 and then at Tuesday's high of US$4.78. First support lies at Tuesday's low of US$4.68 and then at US$4.65.

 

At the Kansas City Board of Trade, bears have regained near-term technical advantage, the analyst said.

 

Bulls' next upside price objective is closing KCBT July wheat above solid chart resistance at US$4.85. The bears' next downside objective is closing prices below solid support at Tuesday's low of US$4.62.

 

First resistance is seen at US$4.70 and then at Tuesday's high of US$4.73. First support is seen at Tuesday's low of US$4.62 and then at US$4.59.

 

Looking at global weather conditions, thunderstorms in central China during the past 48 hours and on Wednesday will help replenish soil moisture for winter wheat, Meteorlogix said. That is negative for prices as it eases concerns about dryness, the CBOT broker said. However, drier, hotter weather may redevelop later in the weekend and during early next week, the weather firm noted.

 

In Australia, drier weather will favor planting during the next several days, according to Meteorlogix. Showers are possible in the west during the weekend and on Monday.

 

Central and eastern areas of the Ukraine are expected to remain mostly dry and possibly hot at times during the next seven to 10 days, increasing stress to reproductive and filling wheat, Meteorlogix said.

 

In other news, three South Korean flour mills bought 22,400 metric tonnes of U.S. No. 1 wheat from trading house Cargill at a tender concluded Wednesday, a trader in Seoul said. The shipment is expected to reach South Korea sometime in July.

 

Pakistan's government, meanwhile, has suspended wheat exports effective immediately to check a jump in local prices during the last two weeks. An official statement didn't say how long the ban would last.

 

Pakistan is recording high output of wheat this year, and there are fears of an artificial price hike. The country had already announced that it would export 500,000 tonnes of wheat and intended to export around 1 million tonnes for this year's crop.