June 25, 2008

 

US Wheat Outlook on Wednesday: Firmer on follow-through, harvest delays

 

 

U.S. wheat futures are expected to open firmer Wednesday on follow-through buying from the overnight and concerns about harvest delays.

 

However, the results of an Egyptian tender could temper bullish ideas, a trader said.

 

Chicago Board of Trade September wheat is called to open 5 to 7 cents per bushel higher. In overnight electronic trading, CBOT September wheat jumped 7 1/2 cents to US$8.95 1/2, and CBOT December wheat rose 7 1/4 cents to US$9.19 1/4.

 

There are bullish concerns about slowed cutting activity in U.S. soft red winter and hard red winter wheat regions, traders said. The short range forecast looks wet in Midwest and Delta SRW wheat areas, according to DTN Meteorlogix.

 

Heat during the next two to three days will help improve conditions for the HRW wheat harvest in the central and southern Plains, Meteorlogix said. After that, weather may get wetter and cooler again, the private weather firm said.

 

"Crop quality is still a concern, as is the potential for harvest delays," Meteorlogix said.

 

Egypt's state-owned General Authority for Supply Commodities, or GASC, said Wednesday it bought 150,000 metric tonnes of optional origin wheat in a tender for shipment July 20-31. Of the total, GASC bought 60,000 tonnes of Russian wheat, with the remaining 90,000 tonnes as optional origin.

 

The modest size of GASC's recent purchases, including Wednesday's, show Egypt is taking its time buying wheat and that it doesn't feel as though it has to rush to secure its needs, a CBOT floor trader said. Egypt bought 90,000 tonnes of Russian wheat last weekend after canceling a tender last week due to high prices.

 

In other news, the grain markets will be watching to see whether the Federal Reserve adjusts interest rates, traders said. A decision is due out at 2:15 p.m. EDT.

 

The bulls' next upside price objective is to push and close CBOT December wheat above solid technical resistance at the June high of US$9.54, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at this week's low of US$8.83 1/2, he said.

 

First resistance is seen at Tuesday's high of US$9.25 and then at US$9.35. First support lies at US$9.00 and then at this week's low of US$8.83 1/2.