August 16, 2006

 

US Wheat Outlook on Wednesday: Steady-firm following overnight gains

 

 

U.S. wheat futures are called to open steady to firmer Wednesday, supported by potential follow-through buying after a firmer close on the Chicago Board of Trade's e-cbot overnight trade and potential spillover from corn and soybeans.

 

Benchmark CBOT September wheat is called to open 2 to 3 cent a bushel firmer.

 

In e-cbot overnight trade, September wheat was up 3 3/4 cents at US$3.80 1/2 bushel and December wheat rose 2 3/4 cent to US$4.00.

 

A dearth of fresh fundamental news could lead to a quiet session on Wednesday.

 

"The early calls are pretty much based on overnight (trade). There isn't much going on," said one floor analyst.

 

After recent losses, wheat futures rebounded on Tuesday in what traders called a consolidation move. The modest strength carried over to the evening session and it could support a firmer start on Wednesday.

 

Analysts said with global wheat stocks tight and potential production problems in Australia and lingering dryness in Argentina, the markets will likely keep a modest premium for the time being.

 

DTN Meteorlogix weather firm said scattered showers Wednesday into Thursday in the North Plains may cause minor harvest delays before drier weather returns Friday.

 

In the Southern Plains, episodes of scattered showers and thundershowers through northern and western locations during the next few days will help to recharge soil moisture. This activity may shift southward during the weekend.

 

Argentina's wheat areas continue to experience dry weather, or with only a few light showers in the east during the next 7-10 days. It may be very cool at times. Rainfall is needed to favor slowly developing winter wheat, especially in the west.

 

Even with an expected firmer open, a technical analyst said CBOT December wheat continues to be in the grips of bears. It will take a close back above psychological resistance at US$4.00 to begin to provide the bulls with some fresh upside technical momentum. The next downside price objective is a close under US$3.89 1/2 a bushel. First resistance is seen at US$4.00 and then at US$4.05 1/2. First support lies at US$3.92 1/2 and then at US$3.89 1/2.