July 23, 2007

US Wheat Outlook on Monday: Up 4-6 cents, following e-CBOT

U.S. wheat futures are seen opening the pit trading session 4 to 6 cents higher. In overnight e-cbot trading, December wheat futures were last up 3 1/2 cents at US$6.37 a bushel.

Look for wheat market traders to keep a close eye on corn and soybean futures markets for near-term direction, said an analyst, adding it's likely wheat will be more of a follower of corn and beans in the near term. Any stronger downside pressure on corn and soybeans will limit the upside in wheat, he added.

In fresh overnight news, private group Australian Crop Forecasters has lowered its forecast for the country's 2007/08 wheat crop to 23.7 million metric tonnes, saying more rain is needed in parts of Queensland and western Australian states. This is down from their previous estimate of 26 million, but is above the 22.5 million estimate by the Australian overnment.

Wheat futures traded on the Liffe exchange traded sharply higher overnight, extending last week's gains to set new historical highs. "Harvesting operations are deeply disrupted by rains, said Paris-based Infograin. Rain fell again in many key European Union wheat-growing regions over the weekend. In addition to the harvest delays, traders said the ongoing wet conditions further reduce the wheat crop's quality and size amid already tight world suppies.

Technically, wheat bulls still have the upside technical advantage, said a market technician. The bulls' next upside price objective is to close prices above resistance at the contract high of US$6.58 a bushel. The next downside price objective for the bears is closing prices below strong support at US$6.10 a bushel. First resistance is seen at Friday's high of US$6.45 and then at last week's high of US$6.51 1/2. First support lies at Friday's low of US$6.30 and then at US$6.25.