October 31, 2007

 

US Wheat Outlook on Wednesday: Down 5-7 cents on follow through, weak e-CBOT

 

 

U.S. wheat futures are predicted to begin day session trading 5 to 7 cents lower Wednesday as follow through selling from Tuesday and the lack of fresh news is expected to weigh on prices at the opening, analysts said.

 

In overnight electronic trading, CBOT December wheat fell 7 cents to US$8.07 per bushel, while December KCBT hard red wheat declined 4 1/2 cents to US$8.32 1/2.

 

Wheat futures should open to the downside continuing the trend that began Tuesday and in the overnight session, a commission house analyst said.

 

The market has been struggling recently and remains in a choppy pattern, a floor trader said. The news that India is looking to import wheat is not having much of an impact as any Indian wheat import needs tend to be drawn out over time, the trader said.

Some consolidation could occur limiting the downside, the commission house analyst said. It is the end of the month, so participants could even up some positions and all the markets are waiting on the Fed's decision on interest rates which could limit any selling interest. In addition, outside inflationary markets are higher which is also supportive.

 

On daily open auction technical charts, CBOT December wheat closed solidly lower and near session lows, with a steep four-week-old downtrend line still in place on the daily bar chart, a technical analyst said. In addition, a bearish head-and-shoulders top pattern has formed on the daily bar chart. The bull's next major upside price objective is to close prices above solid resistance at US$8.41 per bushel. The next downside price objective is to close prices below major psychological support at US$8.00 per bushel.

 

First resistance is seen at Tuesday's high of US$8.24 and then at US$8.30. First support is at US$8.10 and then at US$8.00.

 

December KCBT wheat closed lower and near the session low and a four-week-old downtrend is in placer in hard red winter wheat futures. The bulls' next upside price objective is closing prices above solid resistance at US$8.58 per bushel. The bears' next downside price objective is closing prices below solid support at last week's low of US$8.15 per bushel.

 

First resistance is seen at US$8.47 and then at US$8.58. First support is seen at US$8.35 and then at US$8.33.

 

In other wheat news, Asian buyers may face higher wheat prices in the U.S. Federal Reserve announces a cut in interest rates, which will add further pressure on the U.S. dollar, analysts' said. A weak dollar is expected to increase demand for U.S. commodities as foreign importers gain more buying power.