August 18, 2006

 

US Wheat Outlook on Friday: Steady-firmer following e-CBOT

 

 

U.S. wheat futures are called to open steady to firmer Friday, supported by modest overnight strength on the Chicago Board of Trade's e-cbot platform and ideas the market is oversold.

 

However, analysts said with little fresh supportive fundamental news around, wheat could see a two-sided trade.

 

Benchmark CBOT September wheat is called to open steady to 1 cent a bushel firmer.

 

In e-cbot overnight trade, September wheat was up 1/2 cent at US$3.64 bushel and December wheat rose 3/4 cent to US$3.83 3/4.

 

"I'll give it a higher open based on the overnight support, but fundamentally the market is limited. It deserves a technical rally, but I don't know if it's sustainable. The market has some difficulty holding gains and that is reflecting the fact it is trying to find itself competitively in the export market," said John Kleist, Kleist Agriculture Consulting.

 

Mild pressure is expected from news Egypt bought 60,000 tonnes of Canadian wheat on Friday. Just Thursday Egypt bought a similar amount of U.S. wheat, but as one floor source said, "that's yesterday's news."

 

India's agriculture ministry issued 82 permits to trading companies between June 29 and Aug. 10 for importing 1.847 million metric tonnes of wheat, a senior government official said Friday.

 

"If it comes spread out over a few months it doesn't have the impact as coming all at once," Kleist said.

 

Weather is generally unchanged. DTN Meteorlogix weather firm said in the North Plains thunderstorms are to linger over central and east areas Friday before it turns drier. A few minor harvest delays are likely.

 

The Southern Plains are expected to see episodes of scattered showers and thundershowers will tend to favor the north, central and southwest during the next couple of days.

 

The forecast for Argentina's wheat areas remains largely unchanged with only a few light showers in the east during the next seven days and possibly very cool at times.

 

A technical analyst said CBOT December wheat needs to close above US$4.00 to begin to provide the bulls with some fresh upside technical momentum. The next downside price objective for the bears is closing prices below solid support at the March low of US$3.77 a bushel. First resistance is seen at US$3.90 and then at US$3.95. First support lies at US$3.82 and then at US$3.80.