August 21, 2007

 

US Wheat Outlook on Tuesday: 5-7 cents up on Egypt sale, follow-through

 

 

U.S. wheat futures are expected to start Tuesday's day session 5-7 cents per bushel higher on a sale to Egypt and firm overnight trade, analysts said.

 

In e-cbot overnight electronic trading, Chicago Board of Trade December wheat rose 5 cents to US$6.96.

 

Egypt's state-owned General Authority for Supply Commodities said it bought 240,000 metric tonnes of U.S. soft red winter wheat and 210,000 tonnes of Russian wheat in a tender. The U.S. sale should be particularly supportive to futures at the Chicago Board of Trade, which trades SRW wheat, an analyst said.

 

The U.S. continues to see strong demand for wheat. A week ago, GASC dealt the markets a bullish surprise by buying 415,000 tonnes of U.S. wheat and only 25,000 tonnes of Russian wheat.

 

Global production problems and tight supplies have made the U.S. a primary source for countries looking to buy high-quality milling wheat, analysts said. Along with keeping an eye on demand, the trade is watching condition in the Southern Hemisphere for clues about production potential, they said.

 

Australian wheat in eastern areas benefited from rain during the weekend, and more shower activity during the next seven days may tend to favor West Australia and Queensland, according to DTN Meteorlogix.

 

Argentina, meanwhile, still remains dry, a CBOT floor trader said. There is no significant rainfall in sight for either La Pampa or Buenos Aires wheat areas, Meteorlogix said.

 

CBOT December wheat prices Monday closed near the session high in quieter trading. A minor bear flag has formed on the daily bar chart, but solid gains Tuesday would put the bulls right back in the driver's seat, a technical analyst said.

 

The bulls' next upside price objective is to close CBOT December wheat above resistance at US$7. The next downside price objective for the bears is closing prices below strong support at last week's low of US$6.70.

 

First resistance is seen at Monday's high of US$6.92 and then at US$6.97. First support lies at Monday's low of US$6.78 1/2 and then at US$6.70.

 

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$6.94, the technical analyst said. The bears' next downside objective is closing prices below solid support at last week's low of US$6.49.

 

First resistance is seen at Monday's high of US$6.69 1/2 and then at US$6.75. First support is seen at Monday's low of US$6.57 and then at US$6.49.

 

In other news, Japan said it won't hold its routine weekly wheat import tender this week but did not offer any explanation for the decision.

 

Tunisia's state-run Office Des Cereales said it bought 167,000 metric tonnes of soft wheat for shipment during October and November, on a cost and freight basis. The wheat is of optional origin, and an official didn't disclose the name of the companies from whom the wheat was purchased.