August 30, 2006

 

US Wheat Outlook on Wednesday: Steady to slightly higher start expected

 

 

U.S. wheat futures are expected to begin open auction trading steady to 1/2 cent higher Wednesday following the theme in overnight electronic trading, sources said.

 

In overnight trading at the Chicago Board of Trade, December wheat ended up 1/2 cent to US$4.01 1/4 per bushel, KCBT December hard red wheat rose 1 cent to US$4.74 1/2, and at the Minneapolis Grain Exchange, December wheat ended up 1/4 cent at US$4.62.

 

Because of the Indian tender announcement the market should start out better, said Dale Gustafson, senior analyst at Citigroup Global Markets Inc. However, the strength should be limited because there is some rain in the forecast for Argentina's wheat growing regions and eastern Australia as well, he noted.

 

The U.S. probably won't receive any of the Indian wheat business, but world wheat supplies will continue to tighten and the U.S. will eventually pick up export business from other countries he added.

 

India confirmed Wednesday that it is floating a tender to import 1.67 million metric tonnes of duty-free wheat for delivery by February 2007. The tender will close Sept. 5.

 

The Indian tender should keep world wheat values firm, but trading should be two-sided Wednesday as there is little other fresh news out, a commercial connected analyst said.

 

On technical charts, the bulls' upside price objective in CBOT December remains closing prices above solid resistance at US$4.08 1/2, a technical analyst said. The bears' downside objective is closing prices below solid support of at US$3.95 per bushel, he added. First resistance is seen at US$4.05 and then at US$4.08 1/2. First support is pegged at Tuesday's low of US$4.00 and then at US$3.95.

 

In December KCBT wheat, prices remain in a six-week downtrend from the July high, the analyst said. First resistance is seen at US$4.79 1/2 and then at US$4.81 1/2. First support is seen at US$4.71 and then at US$4.69.

 

Cash wheat basis bids were unchanged to higher Wednesday morning. Hard red winter wheat bids were unchanged with Hutchinson, Kan. unchanged at 5 cents over the September future.

 

Hard red spring wheat was unchanged to higher with Minot, N.D. up 2 cents at 55 cents under September.

 

Soft red winter wheat was unchanged to higher with Evansville, Ind. 2 cents higher at 51 cents under September.

 

In other wheat news, Syria sold 30,000 metric tonnes of soft milling and durum wheat Wednesday, according to Syria's General Establishment for Cereal Processing and Trade, or Hoboob.

 

Hoboob sold 25,000 tonnes of durum wheat to Italy and 5,000 tonnes of soft wheat to Iraq, an official said.