August 13, 2007
US Wheat Outlook on Monday: 6-8 cents higher on overnight, EU strength
U.S. wheat futures are expected to start Monday's day session 6-8 cents per bushel higher on firmer overnight trade and spillover strength from European markets, analysts said.
Trading is expected to be volatile and two-sided at elevated price levels, traders added.
In e-cbot overnight trading, Chicago Board of Trade September wheat rose 6 1/2 cents to US$6.67, and CBOT December wheat ended up 6 1/2 cents to US$6.84 1/2.
Paris- and London-based Liffe wheat futures were up in thin trade and holding just below last week's historic highs. U.K. growers made swift harvest progress during the weekend, but there are concerns about many northern areas that remain uncut.
Weather forecasters have issued a severe weather warning, saying that by Tuesday and Wednesday the U.K. will be buffeted by gale force winds and heavy downpours that could cause flash flooding, according to a report. During the weekend, unfavorable thunderstorms occurred from south and east Germany through northeast and east-central Europe, according to DTN Meteorlogix.
In the U.S. Northern Plains, generally favorable conditions continue for the maturing crop and for harvest, Meteorlogix said. Cooler temperatures and some showers improved conditions for filling wheat in the Canadian Prairies after recent hot, dry weather, the weather firm said.
More rain will be needed in West Australia as temperatures warm during the early spring period, Meteorlogix said. The greatest need for moisture is in the northeast growing regions, including northern New South Wales and Southern Queensland. The chance for showers this week is highest over southeast locations, Meteorlogix said.
In Argentina, more rain is needed to support the crop in most major growing areas but especially in the southwest. There is some chance for increasing rains in the southern belt later this week or during this coming weekend, Meteorlogix said.
In other developments, Egypt's state-owned General Authority for Supply Commodities said during the weekend it bought 115,000 metric tonnes of Russian wheat in a tender. The sale was largely expected because Russia offers cheaper freight costs than the U.S., but the news may still weigh on futures prices, a CBOT floor traders said.
Ukraine harvested 19.9 million metric tonnes of grain in bulk weight to Aug. 1 on 9.6 million hectares, or 40.3% of the planned total area, which is 14.1% more than the year-earlier figure, the state statistics committee reported. Hot weather this year resulted in an earlier start to harvesting but also smaller yields.
Bulls' next upside price objective is to close CBOT December wheat above resistance at the contract high of US$7.10 1/2, a technical analyst said. The next downside price objective for the bears is closing prices below strong support at US$6.58.
First resistance is seen at US$7.00 and then at the contract high of US$7.10 1/2. First support lies at Friday's low of US$6.80 and then at US$6.70.
Non-commercial speculative funds increased long CBOT wheat futures and options positions by 5,297 lots, cut shorts by 401 lots and were net long 7,156 contracts as of Aug. 7, the Commodity Futures Trading Commission said in a supplemental report.
At the Kansas City Board of Trade, bulls' next upside price objective is closing December wheat above solid resistance at the contract high of US$6.86, the technical analyst said. The bears' next downside objective is closing prices below solid support at last week's low of US$6.56.
First resistance is seen at Friday's high of US$6.75 and then at US$6.80. First support is seen at Friday's low of US$6.64 1/2 and then at US$6.60.
In China, prices of newly harvested wheat in most regions continued to rise in the week to Monday as farmers were reluctant to sell in expectation of higher prices, given unfavorable weather conditions, analysts said. New wheat prices in Shandong province, a major wheat-producing region, rose RMB40 a metric tonne from a week ago to around RMB1,600/tonne.
