August 1, 2007

 

US Wheat Outlook on Wednesday: Seen 1-2 cents higher, following European gains

 

 

U.S. wheat futures are expected to begin day session trading 1-to-2 cents higher Wednesday as stronger wheat values in Europe and continued concerns about world production shortfalls are expected to support prices at the opening, analysts said.

 

In overnight electronic trading, CBOT Sep wheat rose 1 1/2 cents to US$6.31 1/2 per bushel and Dec also rose 1 1/2 cent to US$6.50 1/2, while Sep KCBT hard red wheat gained 1 cent to US$6.30.

 

Wheat should be supported by stronger European wheat values overnight as well as the ongoing production concerns in several wheat growing regions, a commercial connected analyst said.

 

The recent round of profit taking is likely to ease as the technical charts remain strong and nothing has changed to alter the bullish fundamental outlook, the analyst said. European weather remains a worry and French wheat prices rose 2.6% overnight in response, which should help support U.S. wheat futures, he said.

 

The news that Egypt bought Russian wheat and none from any other sources is a slight negative but should not have much impact, a trader said.

 

Egypt's General Authority for Supply Commodities, or GASC, bought 150,000 metric tonnes of Russian whea Wednesday after tendering Tuesday for 55,000-60,000 tonnes of optional origin wheat of varying classes.

 

In the U.S. spring wheat belt, above normal temperatures are expected during the next seven days with the chance for light scattered showers for the weekend and into early next week, though there are no major concerns for the ongoing harvest, DTN Meteorologix weather.

 

European wheat growing areas are expected to have cooler temperatures with the occasional light to moderate shower through the end of the week. These are less than ideal conditions for the wheat harvest but are an improvement over last week, Meteorologix said.

 

Favorable soil moisture conditions remain for Australia's wheat crop and light rain is possible in Argentinean wheat growing areas this weekend, DTN Meteorologix Weather said.

 

On daily open auction technical charts, CBOT December wheat closed nearer the session low on continued profit taking though no chart damage occurred, a technical analyst said. The bulls still retain a solid technical advantage with no signs of a market top at hand, the analyst said. The bulls' next upside price objective is closing prices above resistance at the contract high of US$6.78 per bushel, while the next downside price objective for the bears is closing prices beneath solid support at US$6.38 1/2, which would fill on the downside the upside price gap created on the daily bar chart last week, the analysts said.

 

First resistance is seen at Tuesday's high of US$6.56 1/2 and then at US$6.58. First support is seen at US$6.46, Tuesday's low and then at US$6.40.

 

December KCBT wheat closed near the session high with hard red winter wheat bulls still having a strong technical advantage, the analyst said. The bulls' next upside price objective is closing prices above solid chart resistance at the contract high of US$6.68 1/2, while the bears' next downside objective is closing prices below US$6.26, which would fill on the downside last week's upside price gap on the daily chart.

 

First resistance for KCBT December is seen at US$6.50 and then at US$6.59, this week's high. First support is seen at US$6.39, Tuesday's low and then at US$6.35.

 

In other wheat news, Iraq has issued a new tender to buy at least 50,000 metric tonnes of hard wheat, the Grain Board of Iraq announced on their web site. Iraq needs to import 3.6 million tonnes of wheat per year, but has recently remained out of world wheat markets due to the high prices.