September 24, 2007

 

US Wheat Outlook on Monday: Up 13-15 cents on Australia weather, export demand

 

 

U.S. wheat futures are predicted to begin day session trading Monday 13-to-15 cents higher as dry weather over the weekend in Australia and export demand is expected to support prices, analysts said.

 

In overnight electronic trading, CBOT December wheat rose 15 1/2 cents to US$8.89 1/2 per bushel while December KCBT hard red wheat gained 16 1/2 cents to US$8.74 1/2.

 

The weather in Australia is setting the tone for higher prices, a commission house analyst said. It was dry over the weekend and it's a critical time for rainfall for that country's crop. There are some concerns that wheat production in Australia will be lower than anticipated after being reduced already by the dryness, the analyst said.

 

Despite a chance for light showers in western Australia Monday and in the southeast Tuesday and Wednesday, there is no change to the overall dry weather pattern in the major wheat areas during the next 10 days, DTN Meteorlogix Weather said.

 

Overnight news that Iraq was tendering for 50,000 metric tonnes of wheat is also expected to add to the firm tone, another analyst said.

 

The Grain Board of Iraq announced on its Web site that it was tendering to buy a minimum of 50,000 metric tonnes of hard wheat, which follows a recent purchase of 700,000 metric tonnes from the U.S.

 

On daily open auction technical charts, CBOT December wheat closed solidly higher and near session highs, as the bulls regained fresh upside technical momentum Friday, a technical analyst said. The bull's next major upside price objective is to close prices above solid resistance at the contract high of US$9.07 per bushel. The next downside price objective is to close prices below solid support at US$8.30 per bushel.

 

First resistance is seen at last week's high of US$8.81 and then at US$8.90. First support lies at US$8.65 and then at US$8.60.

 

December KCBT wheat closed solidly higher and near the session high, regaining upside technical momentum Friday. The bulls' next upside price objective is closing prices above solid resistance at the contract high of US$8.80 per bushel. The bears' next downside price objective is closing prices below solid support at last week's low of US$8.18 3/4 per bushel.

 

First resistance is seen at Friday's high of US$8.60 and than at last week's high of US$8.65. First support is seen at US$8.50 and then at Friday's low of US$8.39.

 

Non-commercial speculative funds added to long and short CBOT wheat futures and options positions as of Sept. 18, the CFTC said in a supplemental report. The funds increased longs by 221 lots, shorts by 1,367 lots and were net short 3,359 contracts.

 

At the KCBT, speculative funds cut longs by 1,949 lots, increased shorts by 839 lots and were net long 34,500 contracts, according to another supplemental report. At the MGE, speculative funds decreased long positions by 1,770 lots, increased shorts by 75 lots and were net long 10,141 contracts, the CFTC said.

 

In other wheat news, cash wheat prices in China were mostly unchanged in the week ended Monday, as the government's minimum purchase price nears its end and the announcement late last week that China would release grains and vegetable oils from its stocks to stabilize domestic prices.

 

The U.S. Department of Agriculture is scheduled to release the weekly export inspections report Monday at 11:00 a.m. EDT and the weekly crop progress at 4:00 p.m. EDT.