November 2, 2007

 

US Wheat Outlook on Friday: Up 2-3 cents on e-CBOT; waiting for Egypt

 

 

U.S. wheat futures are expected to start Friday's day session mostly higher in a bounce from steep losses Thursday, with the trade waiting for the results of an Egyptian tender, analysts said.

 

Benchmark Chicago Board of Trade December wheat is called to open 2-3 cents per bushel higher. In e-CBOT overnight trading, CBOT December wheat was 1 3/4 cents higher at US$7.80.

 

Wheat futures Thursday closed deep in negative territory, and some contracts temporarily traded limit down, or 30 cents lower. The markets are due for a technical rebound, an analyst said.

 

Firmer crude oil futures and a softer U.S. dollar also could lend some strength to wheat prices, a CBOT floor analyst said. The weaker greenback is seen as supportive for wheat because it gives foreign importers more buying power.

 

Egypt's state-owned General Authority for Supply Commodities said after the close Thursday it was tendering to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Dec. 1-15, on a free-on-board basis. GASC is expected to buy Kazakh or Russian wheat, traders said.

 

India said earlier this week that it planned to import around 1 million metric tonnes of wheat to beef up its buffer stocks. The U.S. is not expected to sell wheat to India due to disagreements over phytosanitary requirements, but the trade is waiting to see whether India follows through on the plan and, if so, how much it buys, an analyst said.

 

China will sell 200,000 metric tonnes of imported wheat from state reserves in an auction on Nov. 8, according to the China National Grain & Oil Trade Center. China holds auctions of imported wheat regularly each month to meet domestic demand.

 

In Argentina, there is a slight chance for frost in the southern wheat areas this weekend, although the cold snap is not expected to cause significant damage to the crop, DTN Meteorlogix said. The next chance for showers does not come until next Thursday or Friday, the weather firm said.

 

Widespread rain or thunderstorms are expected through eastern Australia's crop areas during the next 24-36 hours, followed by cool Conditions, Meteorlogix said. Rain in the east is unfavorable for maturing wheat and may delay the harvest of wheat, the firm said.

 

More rain is still needed for favorable development of wheat through southwest growing areas of the U.S. central and southern Plains, according to Meteorlogix. Conditions are favorable elsewhere in the region.

 

Near-term chart damage was inflicted Thursday on CBOT and Kansas City Board of Trade December wheat, and the bears have fresh downside technical momentum, a technical analyst said. A steep four-week-old downtrend line is still in place on daily bar charts, he said.

 

The bulls' next upside price objective is to push and close prices above major psychological resistance at US$8.00, the analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$7.60. First resistance is seen at US$7.95 and then at US$8.00. First support lies at Thursday's low of US$7.78 and then at US$7.75.

 

At the KCBT, the bulls' next upside price objective is pushing and prices above solid resistance at US$8.40, the analyst said. The bears' next downside objective is closing prices below solid technical support at US$7.75. First resistance is seen at US$8.15 and then at US$8.25. First support is seen at Thursday's low of US$8.02 and then at US$8.00.