July 26, 2006

US Wheat Outlook on Wednesday: Steady-flat, waiting on fresh news

U.S. wheat futures are expected to begin pit trading at steady levels Wednesday, with the market searching for fresh inputs, sources said.

In overnight trading at the Chicago Board of Trade, September wheat rose 1/4 cent to US$3.93 1/2 per bushel, KCBT Sep hard red wheat gained 4 cents to US$4.93 1/2, while at the Minneapolis Grain Exchange, September wheat finished unchanged at US$4.86 1/2.

There is little fresh news out to influence the market, a commercial connected trader said. It could be a two-sided session with the market searching for direction, he added.

Chicago wheat followed the weaker tone in KC and Minneapolis Tuesday and could follow them again Wednesday, he added.

Little reaction is expected from news from the ongoing Spring Wheat tour. Tour participants reported fields observed Tuesday had been damaged by the heat and dryness, taking a toll on expected yields. Based on early observations, tour participants estimate hard red spring yields below 2005 levels.

The tour continues Wednesday before wrapping up Thursday in Fargo, N.D.

On technical charts, it will take a close above solid technical resistance at US$4.36 1/2 in CBOT December wheat to provide bulls with upside technical momentum, a technical analyst said. First resistance is seen at US$4.20, and then at US$4.24 1/2. First support is pegged at US$4.12 1/2, and then at US$4.08.

In December KCBT wheat, the next upside price objective for market bulls is closing prices above US$5.20, with the bears downside objective closing prices below US$4.91, the technician said. First resistance is seen at US$5.10 and then at US$5.20. First support is seen at US$5.01 and then at US$4.91.

Cash wheat basis bids were unchanged to mostly lower Wednesday morning. Hard red wheat basis bids were unchanged to higher with Hutchinson, Kansas unchanged at 10 cents under September.

Spring wheat bids were mixed with Minot, N.D. unchanged at 63 cents under September.

Soft red winter wheat bids were mixed with Cincinnati, Ohio 1 cent lower at 75 cents under the September.

In other wheat news, Japan's Ministry of Agriculture, Forestry and Fisheries bought 18,110 metric tonnes of feed wheat in a tender concluded Wednesday, a ministry official said.

Two groups of South Korean Flour mills bought a total of 43,100 metric tonnes of U.S. wheat from Cargill for delivery in September and October, sources said Wednesday.

The Korea Flour Milling Company is seeking 18,000 metric tonnes of U.S. No. 1 wheat in a tender to be concluded Thursday, a company official said Wednesday.

On Thursday, the U.S. Department of Agriculture is scheduled to release the weekly export sales at 7:30 a.m. CDT.