November 19, 2007

 

US Wheat Outlook on Monday: Up 4-6 cents as world export business increases

 

 

U.S. wheat futures are expected to begin trading 4-to-6 cents higher Monday as a pick up in world wheat export trade and higher prices in overnight activity are expected to provide underlying support for prices at the opening of day session trading, analysts said. In overnight electronic trading, CBOT December wheat gained 6 1/2 cents to US$7.56 per bushel while December KCBT hard red wheat jumped 8 1/2 cents to US$7.83.

 

There is a pick up in world wheat export business and that should support prices, a trader said. India's tender for 350,000 metric tonnes of wheat has attracted strong exporter interest, and Jordan purchased 85,000 tonnes of Russian wheat, the trader said.

 

A weaker U.S. dollar versus other major currencies might also provide some strength, the trader added.

 

Wheat might also draw some strength from concerns about the recent frost in Argentina and its potential impact on the wheat crop there, although any damage to the crop won't be known for a few weeks, an analyst said. Rain is forecast for later in the week which is needed to help the crop recover from recent cold conditions, DTN Meteorlogix Weather said.

 

In the U.S. hard red winter wheat belt, dry weather is expected through Thursday with a chance for light to locally moderate precipitation through southern areas Friday and into Saturday. Temperatures are expected to average below normal in the period, Meteorlogix Weather said.

 

On daily open auction technical charts, CBOT March wheat closed solidly lower and near session lows, as bears still have downside technical momentum as near-term chart damage has occurred recently, with a seven-week-old downtrend still in place on the daily bar chart, a technical analyst said. The bull's next major upside price objective is to close prices above major psychological resistance at US$8.00 per bushel. The next downside price objective is to close prices below solid support at last week's low of US$7.63 per bushel.

 

First resistance is seen at US$7.80 and then at Friday's high of US$7.88. First support is at US$7.66 1/2 and then at US$7.63.

 

March KCBT wheat closed solidly lower and near mid-range Friday as market bears still have downside technical momentum, the analyst said. The bulls' next upside price objective is closing prices above solid resistance at US$8.00 per bushel. The bears' next downside price objective is closing prices below last week's low of US$7.69 per bushel.

 

First resistance is seen at US$8.01, last week's high and then at US$8.10. First support is seen at US$7.77 and then at US$7.69.

 

Non-commercial speculative funds cut long CBOT wheat futures and options positions by 339 lots in the week ended Nov. 13 and increased short positions by 2,381 lots, the Commodity Futures Trading Commission said in a supplemental report. The funds were net short 18,567 contracts.

 

At the KCBT, speculative funds decreased long positions by 4,064 lots, short positions by 608 lots and were net long 27,944 contracts, the CFTC said in another supplemental report. At the MGE, speculative funds increased long positions by 586 lots, short positions by 341 lots and were net long 15,396 contracts, according to the CFTC.

 

In other wheat news, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report Monday at 11:00 a.m. EST and the weekly crop conditions report at 4 p.m. EST.