August 29, 2006

 

US Wheat Outlook on Tuesday: 1/2-1 cent higher; following overnight trade

 

 

U.S. Wheat futures are expected to begin pit trading 1/2 to 1 cent higher Tuesday, following the tone established in overnight activity, sources said.

 

In overnight trading at the Chicago Board of Trade, December wheat rose 1 cent to US$4.05 1/4 per bushel, KCBT December hard red wheat gained 3 1/2 cents to US$4.78 1/2, and at the Minneapolis Grain Exchange, December wheat ended up 1 cent at US$4.64 1/4.

 

Wheat should start out firm based off the overnight activity and French wheat prices made new contract highs as well which should add to the steady tone, a commercial analyst said. Concerns remain about the crop in parts of Europe, Argentina and Australia with world values firm and the market should reflect this, he added.

 

In addition, the funds have been buyers recently and the technical chart pattern is improving as well, he noted.

 

The market may be able to build on the recent gains amid ongoing concerns about world wheat production, said Shawn McCambridge, senior grain analyst with Prudential Financial.

 

Continued demand from India is also supportive, but the market needs to see some confirmation of sales, he added. The market could consolidate around these levels after the recent gains, waiting on demand, McCambridge said.

 

On technical charts, the bulls have fresh upside momentum and their next upside price objective in CBOT December is closing prices above solid resistance at US$4.08 1/2, a technical analyst said. First resistance is US$4.08 1/2 and then US$4.10. First support is seen at US$4.02 1/2, Monday's low, and then at US$4.00.

 

In December KCBT wheat, market bulls would gain better upside technical momentum with a close above resistance at last week's high of US$4.85, the analyst said. However, prices are still in a six-week downtrend from the July high, he added. First resistance is seen at US$4.80 and then at Monday's high of US$4.81 1/2. First support is seen at US$4.72 1/2 and then at US$4.69.

 

In other wheat news, about 20% of the English wheat crop remains to be harvested as wet weather has hampered the collection of the crop and reduced its quality, according to a harvest report released Tuesday by U.K. farm cooperative Grainfarmers.

 

India's agriculture ministry issued four permits to private companies for importing a total of 80,000 metric tonnes of Australian wheat, a senior government official said Tuesday.

 

An Indian company based in Delhi purchased 65,000 metric tonnes of Black Sea origin wheat for September delivery, and sold 18,000 tonnes of the total to trading firm Glencore, a senior commerce ministry official said Tuesday. The official said margins are tight in sales to end-users of wheat such as flour manufacturers within the country and trading companies are now exploring options of resale to their counterparts elsewhere.