November 21, 2007

 

US Wheat Outlook on Wednesday: Up 2-4 cents on technical bounce, Short covering

 

 

U.S. wheat futures are predicted to begin trading 2 to 4 cents higher Wednesday as follow through technical buying and short covering after recent weakness is expected to supply support to prices, analysts said.

 

In overnight electronic trading, CBOT March wheat gained 3 3/4 cents to US$7.99 3/4 per bushel while March KCBT hard red wheat rose 3 1/2 cents to US$8.19 1/2.

 

Wheat should open higher based on follow through from Tuesday and the overnight session as it looks to have bottomed out technically and is in a corrective mode, an analyst said. Trading is expected to be light with some traders beginning their holiday early and wheat futures trading closing early Wednesday, the analyst said.

 

Wheat futures trading at all three US exchanges will close at 1:00 p.m. EST Wednesday ahead of Thanksgiving Day holiday.

 

News that India's government trading companies would soon tender for wheat over the next several weeks should also underpin the market, a trader said. Although the U.S. is not expected to garner any export business, the tenders will tighten overall world wheat supplies, the trader added.

 

Price direction will also depend on what happens in outside markets and trading could be two-sided as some participants may even up positions ahead of the holiday, a broker said.

 

In the U.S. hard red winter wheat belt, mostly dry weather is expected with just a little light rain or snow on Wednesday with dry conditions returning Thursday, DTN Meteorlogix Weather said. Light snow or mixed precipitation is expected on Friday and Saturday with temperatures below-to-much below normal in the period, Meteorlogix said.

 

On daily open auction technical charts, CBOT March wheat closed solidly higher and hit a fresh two-week high on short covering with stronger outside markets providing support, a technical analyst said. The recent downtrend line is still in place on the daily bar chart, but just barely, the analyst said. The bull's next upside price objective is closing prices above major resistance at US$8.00 per bushel. The next downside price objective remains closing prices below last week's low of US$7.63 per bushel.

 

First resistance is seen at US$7.97, Tuesday's high and then at US$8.00. First support is seen at US$7.90 and then at US$7.80.

 

March KCBT wheat settled near the session high and hit a fresh two-week high Tuesday. The bulls' next upside price objective is closing prices above resistance at US$8.20 per bushel. The bears' next downside price objective is closing prices below solid support at US$7.90 1/2, this week's low.

 

First resistance is seen at US$8.16, Tuesday's high and then at US$8.20. First support is noted at US$8.00 and then at US$7.94.

 

In other wheat news, the weekly export sales report will be delayed until Friday as the U.S. government is closed Thursday for Thanksgiving Day.