July 24, 2007

 

US Wheat Review on Monday: Moderate gains on eurpean crop woes

 

 

U.S. wheat futures closed higher and nearer their session highs Monday. Heavy rains that are negatively impacting European wheat production potential were a fresh fundamental input for the bulls. However, strong losses in corn and soybean futures Monday did limit the upside in wheat futures, said an analyst.

 

Chicago Board of Trade September wheat futures closed up 4 cents at US$6.20 1/4 a bushel. December futures closed up 4 cents at US$6.37 1/2 a bushel.

 

Kansas City Board of Trade September wheat futures closed up 6 1/4 cents at US$6.09 3/4 and December futures closed up 6 1/2 cents at US$6.25 1/4.

 

Minneapolis Grain Exchange September wheat closed up 1 1/4 cents at US$6.21 1/4 and December closed up 3/4 cent at US$6.33 3/4.

 

After the close, Dow Jones Newswires reported that Egypt's GASC has tendered to buy 55,000-60,000 metric tonnes of wheat. The shipment period is Aug. 21-31. Last week, a big purchase by Egypt revived flagging wheat futures markets.

 

It was reported overnight that private group Australian Crop Forecasters 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 metric tonnes, but is above the 22.5 million tonne estimate by the Australian government.

 

Paris and London 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.

 

"The problems in Europe are reminiscent of the HRW harvest season in the U.S.," said a brokerage analyst. "Much of the crop is ready to be harvested but farmers cannot get into the fields and soils are saturated and rain continues to cause delays. This has the potential to cause further tightening of the world balance sheet," said the brokerage analyst.

 

 

Chicago Board of Trade

 

Technically, wheat bulls still have the upside technical advantage, said a market technician. Bulls' next upside price objective is to close December futures 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 last Friday's high of US$6.45 and then at last week's high of US$6.51 1/2. First support lies at Monday's low of US$6.29 and then at US$6.25.

 

 

Kansas City Board of Trade

 

Hard red wheat bulls also still have the technical advantage, said the technician. Bulls' next upside price objective is closing December futures prices above solid resistance at last week's high of US$6.34 a bushel. The bears' next downside objective is closing prices below solid support at US$6.00 a bushel. First resistance is seen at last Friday's high of US$6.29 and then at US$6.34. First support is seen at Monday's low of US$6.18 1/2 and then at US$6.15.

 

 

Minneapolis Grain Exchange

 

Traders will be watching this week's 2007 Hard Spring & Durum Wheat Tour after favorable rains fell on much of the northern plains states this spring. The crop's condition is expected to be much better than last year, when intense heat lowered yeilds and quality. The tour, sponsored by the Wheat Quality Council, kicks off Tuesday in Fargo, N.D, and will survey fields in North Dakota, South Dakota and Minnesota. The tour ends Friday, when a final yield estimate will be released in the afternoon.

 

December hard red spring finds support at US$6.30 and then at US$6.25. Resistance is seen at Monday's high of US$6.38 and then at last week's high of US$6.45 1/2.