October 17, 2007

 

US Wheat Outlook on Wednesday: 2-4 cents higher on overnight, rebound

 

 

U.S. wheat futures are called to start Wednesday's day session 2 to 4 cents per bushel firmer in a modest rebound from recent heavy liquidation, traders said.

 

In e-cbot overnight trading, Benchmark Chicago Board of Trade December wheat rose 4 cents to US$8.32 1/2.

 

Long liquidation and profit-taking have yanked U.S. wheat futures lower for the previous three day sessions, and prices are due for a bounce, an analyst said. The markets are short-term oversold, he added.

 

Some bargain buying also could boost prices a bit, although there remains a lack of fresh, supportive news to feed the bulls, analysts said. A major bull market must be fed bullish fundamental inputs often, a technical analyst said.

 

Japan said it was seeking 85,000 metric tonnes of wheat in a routine tender to be concluded Thursday. However, the trade is looking for more unexpected demand news, analysts said.

 

Liffe European wheat futures rose early on a small amount of consumption interest, a London-based broker said. "Small orders are having a bigger affect" on the E.U. futures because low volumes are being traded, he said.

 

Despite the overnight gains, U.S. wheat futures could come under pressure from more long liquidation, a CBOT floor trader said. The market is consolidating from a rally to all-time high prices, he said.

 

Indeed, price action for CBOT December wheat this week has seen a bearish downside "breakout" from a bear flag pattern on the daily bar chart, the technical analyst said. Bulls have faded and their next upside price objective is to push CBOT December wheat above resistance at US$8.60, he said. The next downside price objective for the bears is pushing and closing prices below major psychological support at US$8.00.

 

First resistance is seen at Tuesday's high of US$8.33 and then at US$8.41. First support lies at US$8.20 and then at Tuesday's low of US$8.10.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is pushing KCBT December wheat above resistance at US$8.60, the analyst said. The bears' next downside objective is pushing prices below support at US$8.18 3/4.

 

First resistance is seen at Tuesday's high of US$8.41 and then at US$8.50. First support is seen at Tuesday's low of US$8.25 and then at US$8.18 3/4.

 

Shower activity in the U.S. central and southern Plains this week should maintain soil moisture for hard red winter wheat, traded at the KCBT, according to the DTN Meteorlogix forecast. However, the southwest growing belt continues to be on the lower end of the rainfall forecasts.

 

In Ukraine and southern Russia, weekend rain may mean field work and planting delays, but the precipitation is needed to replenish soil moisture for winter wheat after a drought this year, Meteorlogix said. Ukraine's total grain harvest this year is expected to be 28 million tonnes in clean weight, down from 34.3 million tonnes last year, the agriculture ministry said.

 

Ukraine exported 178,700 tonnes of grain from July 1, the beginning of the marketing year, to Sept. 30, compared with 4.1 million tonnes in the same period last year. The steep drop in sales is the result of the virtual ban on grain exports the gov