June 14, 2006

 

US Wheat Outlook on Wednesday: Mixed, technical rebound vs harvest

 

 

U.S. wheat futures were called to open mixed Wednesday, with a bounce from Tuesday's break to a five-week low in Chicago Board of Trade July wheat futures offset by U.S. wheat harvest pressure, brokers said.

 

Both CBOT and Kansas City Board of Trade wheat traders should continue to eye incoming U.S. winter wheat harvest reports, while rolling of nearby July positions may be seen ahead of the June 30 first notice day for deliveries in the three wheat futures markets, they added.

 

Gold, crude oil, and CBOT soy and corn futures were also seen as possible influences in Wednesday's U.S. wheat futures trade, brokers said.

 

"Outside markets are firm, and the soybean crush was five million bushels above expectations, a surprise for the soy market," said Vic Lespinasse, a CBOT analyst for AG Edwards & Sons, early Wednesday. "But CBOT corn and soybean traders will continue to follow U.S. Midwest weather forecasts for direction."

 

In the overnight e-CBOT session, most-active July wheat closed down 1 cent at US$3.68 3/4.

 

"Prices Tuesday closed near the session low and hit a fresh five-week low," a technical source said. "It still appears a near-term market top is in place. The next downside price objective for the bears is solid technical support at the March and April lows of US$3.51. It will take a close back above resistance at US$4.00 to provide the bulls with fresh upside technical momentum."

 

First resistance for CBOT July wheat was seen at US$3.77 1/4 - Tuesday's high - and then at US$3.82. First support was seen at US$3.68 1/2 - Tuesday's low - and then at US$3.65.

 

Kansas City Board of Trade July wheat ended overnight up 1 cent at US$4.72 1/2 per bushel.

 

"Prices closed near the session low and hit a fresh four-week low," a technical source said. "A three-week-old downtrend line is now in place on the daily bar chart. The bears still have downside technical momentum. Their next downside objective is closing prices below support at US$4.50. It will take a close back above major psychological resistance at US$5.00 a bushel to provide the bulls with fresh upside technical momentum."

 

First resistance for KCBT July wheat was seen at US$4.78 1/2 - Tuesday's high - and then at US$4.85. First support was seen at US$4.71 - Tuesday's low - and then at US$4.65.

 

Cash U.S. hard red winter wheat basis bids were steady to weak Wednesday, with a 16-cent loss in Lincoln, Neb. and a 2-cent loss in Portland, Ore.; soft red winter wheat basis bids were steady to weak, with a 5-cent loss in St. Louis and a 4-cent loss in the Kansas City truck bid; and spring wheat basis bids were steady to firm, with a 5-cent gain in Aberdeen, South Dakota, grain merchandisers said.

 

In U.S. wheat export news, three South Korean flour mills bought 24,000 tonnes of U.S. wheat.

 

U.S. wheat traders also continued to monitor planting and weather reports from Australia and Argentina. They also awaited any possible news of an Iraqi wheat tender and any further news from India regarding this week's tender for 2.2 million tonnes of wheat.