July 13, 2007

 

US Wheat Outlook on Friday: Consolidation possible amid lack of news

 

 

U.S. wheat futures are expected to begin Friday's day session steady to lower amid an absence of new inputs and with consolidation possible before the weekend, traders said.

 

In e-cbot overnight trading, Chicago Board of Trade September wheat closed unchanged at US$6.21 1/2 per bushel, while CBOT December wheat ended down 1/2 cent at US$6.36 1/4.

 

There was not much fresh news out overnight, but wheat may find some leadership from excitement in the soybean market, said Chad Henderson, analyst with Prime Agricultural Consultants. Soybeans have rallied to new contract highs this week on technical strength, weather concerns and long-term fundamental support.

 

Weather remains a worry for the soybean and corn markets amid forecasts for hot, dry weather during the next 6-10 days in the Midwest, traders said.

 

A hot and dry pattern also exists westward from the western Dakotas during at least the next seven to 10 days, which could increase stress to spring wheat, DTN Meteorlogix said. The eastern Dakotas and northern Minnesota will not be as hot or as dry during this period, the weather firm said.

 

"The debate is, 'Is the spring wheat far enough along to handle the heat?'" Henderson said.

 

In the U.S. Southern Plains, thunderstorms continue to cause problems for any unharvested winter wheat, especially in the southern belt, Meteorlogix said. Argentine wheat areas, meanwhile, are expected to stay dry or see only a few light showers during the next seven days.

 

In Australia, there is still some concern through the West Australia wheat belt due to lack of a consistent rainfall pattern during the fall and early winter period, Meteorlogix said. The next chance for showers in the area does not come until late next week, and early indications suggest only a light event, the firm said.

 

The bulls' next upside price objective is to close CBOT December wheat above resistance at the contract high of US$6.58. 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 Thursday's high of US$6.40 and then US$6.45. First support lies at Thursday's low of US$6.26 and then at US$6.18.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is closing December wheat above solid resistance at US$6.31. The bears' next downside objective is closing prices below solid support at US$6.00, which would also nearly fill on the downside an upside price gap on the daily bar chart.

 

First resistance is seen at US$6.31 and then at US$6.40. First support is seen at Thursday's low of US$6.16 and then at US$6.10.

 

In other news, grain stocks in Ukraine on July 1 totaled 3.613 million metric tonnes, including 1.789 million tonnes of milling grain, the agriculture ministry said. That compares with a total of 3.366 million tonnes on July 1 2006. Soft wheat stocks on July 1 totaled 2.162 million tonnes, including 631,800 tonnes of third grade milling wheat.

 

The increase in grain stocks, compared with last year, is due to an earlier harvest as the development of crops has been stimulated by hot, dry weather. Yields, however, are lower than last year.

 

Moldova's wheat harvest this year will fall to 400,000-450,000 metric tonnes from the normal 700,000-750,000 tonnes because of drought, the agriculture ministry said. The country will have to import 230,000-260,000 tonnes of milling wheat in the 2007-2008 marketing year.

 

India's federal government said Friday it plans to issue more tenders to import wheat after taking into account demand, availability and price trends.