August 8, 2007

 

US Wheat Outlook on Wednesday: 1-2 cents higher, taking cue from overnight

 

 

U.S. wheat futures are expected to start Wednesday's day session slightly higher on overnight gains and with traders looking ahead to the release of updated crop reports, analysts said.

 

Wheat futures are called to open 1-2 cents per bushel higher. In e-CBOT overnight trading, CBOT September wheat finished up 2 1/4 cents at US$6.64 3/4, and CBOT December wheat closed up 1 3/4 cents at US$6.84 1/4.

 

In general, there was a lack of fresh news out overnight for the wheat markets, traders said. Market participants are waiting for the U.S. Department of Agriculture to put out its August crop production and supply/demand reports on Friday, they said.

 

The average analyst estimate for 2007-08 U.S. wheat carryout is 402 million bushels, down from the USDA's July estimate of 418 million bushels, according to a Dow Jones Newswires survey. The average analyst estimate for 2007-08 U.S. all-wheat production was 2.129 billion bushels, down from the USDA's July estimate of 2.138 billion, the survey said.

 

U.S. wheat futures could feel some spillover support from strength in French wheat, an analyst said. Liffe Paris-based milling wheat futures were higher on continued worries about tight global supplies and as the advancing EU harvest confirmed reduced yields, traders said.

 

More favorable conditions are on tap for late-filling spring wheat in the U.S. Northern Plains and Canadian prairies, DTN Meteorlogix said in a forecast. The spring wheat crops should see less heat and some shower activity, but there are no significant concerns about rain impeding harvest, the weather firm said.

 

In West Australia, soil moisture conditions are favorable for developing wheat, Meteorlogix said. Periodic rainfall during the past four to six weeks has helped improve the condition of the crop, the firm said.

 

Argentine wheat fields should see mostly dry conditions during the next seven days, according to Meteorlogix. More rain is needed for planting, emergence and development of the crop.

 

The bulls' next upside price objective is to close CBOT December wheat above resistance at US$7.00, a technical analyst said. The next downside price objective for the bears is closing prices below strong support at US$6.58, which would fill on the downside an upside price gap created on the daily bar chart.

 

First resistance is seen at Tuesday's contract high of US$6.86 and then at US$6.90. First support lies at Tuesday's low of US$6.78 and then at US$6.70.

 

At the Kansas City Board of Trade, bulls' next upside price objective is closing prices above solid resistance at the contract high of US$6.68 1/2, the technical analyst said. The bears' next downside objective is closing prices below solid support at US$6.26, which would fill on the downside an upside price gap on the daily chart.

 

First resistance is seen at Tuesday's high of US$6.66 1/2 and then at US$6.68 1/2. First support is seen at Tuesday's low of US$6.60 and then at US$6.58.

 

In other wheat news, Kazakhstan will supply up to 300,000 metric tonnes of wheat annually to Jordan, according to an agreement reached at an intergovernmental commission meeting. Kazakhstan has not exported any grain to Jordan this year but sold 819,000 tonnes of wheat to Jordan in 2002-2006, with supplies in 2006 only amounting to 6,000 tonnes.

 

Japan said it bought 7,405 metric tonnes of feed wheat and 116,400 tonnes of feed barley in a simultaneous buy-sell or SBS tender concluded Wednesday, said a ministry official.