July 16, 2007

 

US Wheat Outlook on Monday: 8-10 cents lower, following CBOT corn and soy

 

 

U.S. wheat futures are expected to start Monday's day session under pressure from sharp overnight losses in the neighboring corn and soybean markets, analysts said.

 

Wheat futures are called to open 8 to 10 cents lower per bushel. In e-cbot trading, Chicago Board of Trade September wheat tumbled 10 1/4 cents to US$6.10 1/2, and CBOT December wheat ended down 9 1/2 cents at US$6.25 3/4.

 

CBOT corn and soybean futures closed with double-digit losses overnight on forecasts for wetter-than-expected weather in the U.S. Midwest. There is little fresh news out for wheat, so the markets will probably continue to look toward corn and soybeans for direction, an analyst said.

 

The long-term outlook for wheat, however, remains bullish amid tight global supplies and unfavorable weather in Argentina and Australia, the analyst said. The trade wants to see solid export demand or supportive supply side new to move prices higher, he said.

 

The U.S. Department of Agriculture is set to release weekly export inspections data at 11 a.m EDT and a weekly crop progress report at 4 p.m. EDT.

 

Spring wheat grown on the U.S. Northern Plains should see hot and mostly dry weather for at least the next six to 10 days, DTN Meteorlogix said. The pattern increases stress to crops, with the hottest weather seen in the west, the weather firm said.

 

In the Southern Plains, drier conditions are providing a better outlook for winter harvesting, Meteorlogix said. There were a few thunderstorms during the weekend, but coverage was not that high, the firm said.

 

The bulls' next upside price objective for CBOT December wheat is above resistance at the contract high of US$6.58, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$6.20. First resistance is seen at last week's high of US$6.40 and then US$6.45. First support lies at Friday's low of US$6.30 1/2 and then at US$6.26.

 

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 technical analyst said. The bears' next downside objective is closing prices below solid support at US$6.10 a bushel. First resistance is seen at US$6.31 and then at US$6.40. First support is seen at US$6.20 and then at US$6.15.

 

In other news, Taiwanese flour millers are asking the government to relax rules on the presence of pesticides in imported wheat following the rejection of a shipment from the U.S., a senior official of the Taiwan Flour Millers Association said. The official, who declined to be named because he is not authorized to speak to the media, confirmed Taiwanese authorities Saturday rejected a U.S. shipment of 9,000 tonnes of wheat imported 10 days ago after detecting residues of a pesticide called malathion.

 

Russia, meanwhile, may impose an export duty on grain in the summer or autumn of this year if prices on the domestic market grow faster than the rate of inflation and the state is forced to sell intervention grain, the agriculture minister said.

 

India's agriculture minister said the country will issue regular tenders to import more wheat despite high global prices, although that news was already known, CBOT floor traders said. He said the U.S. had suggested that quality rules for importing wheat should be diluted to open the door for some U.S. sales, but India's scientific community is opposed to that idea.

 

China's wheat prices were mostly stable in the week to Monday, with new wheat prices in some regions rising slightly on tight supply. The average prices of medium white wheat in Henan province, a major wheat-producing region, were at RMB1,470-RMB1,480/tonne, unchanged from the previous week.