August 21, 2006

 

US Wheat Outlook on Monday: Up 2 To 4 cents; overnight, friday carryover

 

 

U.S. wheat futures are seen starting Monday's day session activity on firm footing based off overnight trading, with carryover momentum from Friday's advances adding support.

 

In overnight electronic trading, Chicago Board of Trade September wheat was 2 1/4 cents higher at US$3.66 3/4 and CBOT December wheat was 2 1/4c higher at US$3.85 1/2.

 

The market is poised to follow the overnight theme, seemingly wanting to recover from prior losses as there is not much in the form of news, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

Rumors of possible new export business fueled a late session recovery in wheat futures Friday, and with the market in need of demand news, follow through momentum may be on tap, traders said.

 

However, the lack of confirmation of any export business may lead to two-sided price action, as bearish technical momentum and talk of improving soil conditions in the winter wheat belt ahead of fall plantings applies light pressure, traders added.

 

A technical analyst said serious near-term chart damage has occurred recently, and it will take a close back above psychological resistance at US$4.00 basis CBOT December wheat to begin to provide some fresh upside technical momentum. The next downside price objective is closing prices below solid support at Friday's low of US$3.76 3/4 a bushel.

 

First resistance is seen at US$3.85--Friday's high-and then at US$3.90. First support lies at US$3.76 3/4--Friday's low--and then at US$3.70.

 

The DTN Meteorlogix Weather Service forecast said episodes of scattered showers and thundershowers will continue to replenish soil moisture for the next winter wheat crop in the southern U.S. plains during the week. This is especially likely for Kansas but possible almost anywhere, Meteorlogix reported.

 

Drier conditions are on tap during the next few days in the northern plains, with scattered thundershowers through eastern and southern locations later this week, Meteorlogix forecasts. There are no significant concerns for the on going harvest of drought reduced crops, Meteorlogix added.

 

The Commodity Futures Trading Commission reported Friday; large speculative traders held net long combined futures and options positions totaling 3,446 lots in CBOT wheat as of August 15. In Kansas City Wheat, large speculative traders were net long combined futures and options to the tune of 40,163 lots and net long combined futures and options in Minneapolis wheat by 6,436 lots.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report 10:00 a.m. CDT and weekly crop progress report 3:00 p.m. CDT.

 

In global wheat news, India's state-run trading MMTC Ltd. (513377.BY) Monday canceled its recently issued tender to buy up to 120,000 metric tonnes as the price quoted by the bidders were too high. China's wheat prices were little changed last week, while trading volume rose in the north and declined in the south, analysts said.

 

Australian exporter AWB Ltd. (AWB.AU) will complete contracts to supply 1 million metric tonnes of wheat to India by November, company spokesman Peter McBride said Monday. AWB is about one-third through its current commitments with the speed of exports to quicken in coming months, McBride said.