July 24, 2006

US Wheat Outlook on Monday: Seen 2-3 cents lower on profit taking

U.S. Wheat futures are expected to begin pit style trading 2-3 cents lower Monday on profit taking after last week's strength, sources said.

In overnight trading at the Chicago Board of Trade, September wheat fell 3 1/4 cents to US$4.04 per bushel, KCBT Sep hard red wheat dropped 8 1/2 cents to US$4.97 1/2, while at the Minneapolis Grain Exchange, September wheat fell 4 cents at US$5.00.

Wheat should start out weaker, a floor analyst aid. The market was lower overnight and is due for some profit taking after recent strength, he added. In addition, European wheat futures were lower overnight and the export markets are relatively quiet, he noted.

The market looks like it's set to take a breather right now after last week, a commercial connected analyst said. However, a lot will depend on what the commodity funds do, he said.

Large non-commercial traders increased their long CBOT wheat futures and options on futures positions and decreased their short positions and are now long 19,330 contracts as of July 18, the Commodity Futures Trading Commission reported Friday.

At the KCBT, large non-commercial traders reduced their long positions by 8,975 contracts and increased their short positions by 2,043 contracts and are now net long 59,374 futures and options on wheat futures, the CFTC reported.

On technical charts, it will take a close above US$4.36 1/2 in CBOT December wheat to provide bulls with better technical momentum, a market technician said. First resistance is seen at US$4.32, Friday's high and then at US$4.36 1/2. First support is seen at US$4.23, Friday's low and then at US$4.20.

In December KCBT wheat, the bulls are regaining upside power, the analyst said, with the next upside price objective closing prices above the contract high at US$5.39. First resistance is seen at US$5.25 and then at US$5.28. First support is seen at Friday's low of US$5.15 and then at US$5.10.

In other wheat news, cash prices for wheat delivered to Asia may decline in the week ahead with the harvesting of the U.S. spring wheat crop set to begin, sources said.

Cash wheat prices in China were unchanged last week as selling by producers to state warehouses remains active, sources said.

South Korea's Nonghyup Feed Inc. or NOFI , is seeking 105,000 metric tonnes of optional-origin feed wheat in a tender to be concluded Late Monday, a South Korean based trader said.

Monday morning, the U.S. Department of Agriculture is scheduled to release the weekly export inspections at 10:00 a.m. CDT and at 3:00 p.m. CDT the weekly crop progress is scheduled for release.