July 10, 2007

 

US Wheat Outlook on Tuesday: 3-4 cents higher on egypt export business hopes

 

 

U.S. wheat futures are expected to start Tuesday's day session higher on hopes of securing export business to Egypt and on firmer overnight trade, analysts said.

 

Wheat futures are expected to start 3-4 cents higher per bushel. In e-cbot overnight trading, Chicago Board of Trade September wheat rose 4 1/2 cents to US$6.03 3/4.

 

Egypt's state-owned General Authority for Supply Commodities is tendering to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Aug. 11-20 on a free-on-board basis, an official said Monday after the end of the day session.

 

GASC is looking to purchase 55,000 to 60,000 tonnes of U.S. hard red winter wheat, U.S. soft red wheat, U.S. soft white wheat, French milling wheat, Argentine wheat or Canadian soft wheat, the official said. Traders expect Egypt to buy even more, they said.

 

There also could be support from India's purchase of 511,000 metric tonnes of wheat in a tender, CBOT floor traders said. Industry chatter indicates the wheat was mainly of Russian and Canadian origin and not from the U.S., but the sale still takes wheat off the world market, a floor trader said.

 

About 256,000 tonnes of the wheat is Russian, and about 249,000 tonnes is from Canada, traders said. The wheat will delivered between August and September at the Mundra port in western India and will be supplied by Cargill, Toepfer and Riaz Trading.

 

"Let Russia sell all they want," a CBOT floor broker said. "They'll run out soon."

 

Japan said it is seeking 100,000 metric tonnes of wheat in a routine tender to be concluded Thursday. The entire shipment is expected to arrive between Aug. 26-Sept. 25.

 

Ukraine, meanwhile, exported 3.3 million metric tonnes of wheat in the 2006-2007 marketing year, compared with 6.4 million tonnes in the previous marketing year, the state customs authority reported Tuesday. Wheat export in June was 728,100 tonnes, compared with 40,100 tonnes in May, due to the lifting of an export ban.

 

Looking at the technical picture for CBOT December wheat, a rare and potentially bearish broadening pattern has formed on the daily bar chart, which could turn into a bearish diamond pattern, a technical analyst said. However, no serious chart damage has occurred yet, he said.

 

Bulls' next upside price objective is to close CBOT December wheat above resistance at US$6.35. The next downside price objective for the bears is closing prices below psychological support at US$6.00, which would also almost fill on the downside an upside price gap on the daily bar chart.

 

First resistance is seen at US$6.20 and then at Monday's high of US$6.26 1/2. First support lies at Monday's low of US$6.11 and then at US$6.06 1/2.