November 20, 2006
US Wheat Outlook on Monday: 10-12 cents up on overnight, corn leadership
U.S. wheat futures are expected to start Monday's day session firmer on momentum from a sharply higher overnight trade and on support from stronger prices in the neighboring corn market, sources said.
Benchmark Chicago Board of Trade December wheat is called to open 10-12 cents per bushel firmer.
In e-cbot overnight trade, December wheat jumped 12 1/4 cents higher to US$4.86 1/4.
CBOT December corn rose 9 1/2 cents to US$3.64 3/4 per bushel, and was seen as the leader of the overnight grains rally, sources said.
"We're going to be riding corn" in the day session, a CBOT floor source said. "That's what we were doing over the weekend."
Support for wheat futures prices also was seen from higher Chinese wheat prices, sources said. China's wheat prices soared in major producing regions last week due to tight supplies and because there were no new government wheat auctions, analysts said Monday.
The rise in Chinese prices may not last for long, however, as the government is expected to hold auctions soon, analysts said.
There have been concerns about parched conditions in China's Shandong province, a key wheat-growing area. DTN Meteorlogix said dryness is expected to continue there, although the weather firm noted that rainfall in China's southern wheat areas during the weekend helped maintain soil moisture.
In Australia, a hot, dry weather pattern over much of the country will favor the harvest of the drought-reduced wheat crop, Meteorlogix said.
Argentina also will see drier weather during the next five to seven days, the firm said.
Argentina on Friday temporarily closed its export registry for 2006-07 grains but was expected to reopen Monday for all export declarations except new-crop corn, sources said. The closure was in response to a surge in new-crop corn export commitments, and the registry will remain closed for corn until the government can analyze all the declarations and verify their validity, an official said.
All Argentine agricultural exports must be registered for export.
In the U.S., very warm and dry weather is seen in the Southern Plains this week, conditions that will further deplete available soil moisture for wheat, Meteorlogix said.
Harvest conditions should improve in the U.S. Midwest this week under a drier and warmer weather pattern, although it may again become wet again next week, the firm said.
A technical analyst said the next CBOT December wheat downside price objective for the bears is closing prices below support at US$4.60. The bulls' next upside price objective is to close prices above solid resistance at US$5.00.
First resistance is seen at Friday's high of US$4.75 and then at US$4.80. First support lies at Friday's low of US$4.66 and then at 4.60, he said.
In other news, Egypt said Monday it had signed a barter deal to import 120,000 metric tonnes of Kazakhstan wheat worth US$29 million. Kazakhstan wheat is one of the best kinds of wheat when it comes to high protein content, an Egyptian official said.
There were rumors last week that Egypt would tender for U.S. wheat after prices closed lower Thursday but that did not happen. The U.S. has traditionally been the biggest exporter of wheat to Egypt but has been losing its status over the past three years to competitors, such as France and Russia.
Still, CBOT traders said they were not concerned Kazakhstan's barter deal with Egypt would hurt U.S. export sales, which have been described as slow and disappointing this year.
"It's just a couple of cargoes," one trader said about the shipment.
India's wheat sowing, meanwhile, has so far progressed well, with plantings estimated at 7.1 million hectares as of Nov. 17, up by 2.2 million hectares from a year earlier, sources said. Sowing progress and subsequent production are factors that will determine the volume of India's wheat imports in 2007.
India has been promoting its planting progress for "a couple of months now," a CBOT floor source said.
"That's nothing new," he said.
