August 28, 2007

 

US Wheat Outlook on Tuesday: 8-11 cents higher following overnight gains

 

 

U.S. wheat futures are predicted to begin the day session trading 8 to 11 cents higher Tuesday as surging wheat values in Europe and an increase in world export business are expected to boost prices at the opening, analysts said.

 

In overnight electronic trading, Chicago Board of Trade September wheat rose 10 3/4 cents to US$7.33 per bushel and December also rose 10 3/4 cents to US$7.48 3/4. September Kansas City Board of Trade hard red wheat gained 8 cents to US$6.89.

 

World wheat markets remain very firm, European wheat futures made a new high overnight, and there has been a flurry of export business, an analyst said.

 

Egypt bought 85,000 metric tonnes of Russian wheat and Jordan bought 100,000 tonnes of Russian wheat. Egypt's purchase was for prompt shipment, which will underpin the market, the analyst said.

 

Demand remains very strong, with India still tendering for wheat and Iraq recently purchasing wheat as well, so the market continues to be supported by demand, a floor trader said.

 

Monday afternoon's U.S. spring wheat crop progress report isn't expected to have much impact, as the harvest is winding down and near last year's pace, an analyst said.

 

The U.S. Department of Agriculture reported that 87% of the U.S. spring wheat crop was harvested, slightly lower than the 90% in 2006, but above the 69% five-year average.

 

In the U.S. spring wheat belt, scattered light showers with amounts from 0.10 to 0.25 inch are possible Tuesday, with mostly dry conditions on Wednesday, DTN Meteorlogix Weather said. Temperatures are expected near to below normal Tuesday, and above normal in the west and near normal in the east on Wednesday, Meteorlogix said.

 

On daily open auction technical charts, CBOT December wheat closed mid-range on mild profit-taking from recent gains Monday, a technical analyst said. However, bulls still have solid power, and their next upside objective is to close prices above resistance at last week's all-time high of US$7.54 per bushel. The next downside objective for market bears is closing prices below strong psychological support at US$7.00 per bushel. First resistance is seen at Monday's high of US$7.43 and then at US$7.54. First support is seen at Monday's low of US$7.34 and then at US$7.24.

 

December KCBT wheat closed near the session high with hard red winter wheat bulls having a strong technical advantage with no signs of a market top, the analyst said. The all-time high in hard red winter wheat futures is US$7.44, and the bulls' next upside price objective is closing prices above US$7.00 per bushel. The bears' next downside price objective is closing prices below solid support at US$6.70 per bushel.

 

First resistance is seen at US$7.00 and then at US$7.10. First support is seen at Monday's low of US$6.93 and then at US$6.88.

 

In other wheat news, India plans to issue more tenders to import wheat this year without specifying volumes, the country's Food and Agriculture Minister said Tuesday.