December 3, 2007

 

US Wheat Outlook on Monday: Down 3-5 cents following e-CBOT weakness

 

 

U.S. wheat futures are expected to begin trading 3 to 5 cents lower Monday, following the tone established in overnight trading amid the lack of fresh fundamental news, a commission house analyst said.

 

In overnight electronic trading, Chicago Board of Trade March wheat fell 4 1/4 cents to US$8.81 1/4 per bushel, while March Kansas City Board of Trade hard red wheat declined 4 1/2 cents to US$9.01 1/2.

 

The market should experience a choppy session with the lack of fresh news limiting price direction, the commission house analyst said. There is not a lot of fresh news to trade from, but the market remains on edge about world wheat export demand.

 

India appears to be ready to buy wheat, a trader said. Although it is not expected to purchase U.S. wheat, the business should give the market some support.

 

India's state-run trading company PEC Ltd. received bids in a range of US$395.88-US$483 per metric tonne for its latest wheat tender, a senior company official said Monday.

 

There was some rain in the U.S. central plains but it is expected to be dry for the next several days, which might also limit downside momentum, the trader said.

 

In the U.S. hard red winter wheat belt, there was scattered precipitation during the weekend, with amounts averaging 0.10-0.50 inch through south-central Nebraska and parts of north-central and northeast Kansas, DTN Meteorlogix Weather said. Mainly dry weather is expected through Wednesday, with a chance for a little light precipitation on Thursday, favoring central and eastern areas, the weather service said. Temperatures in the period are expected to average near to mostly above normal.

 

On daily open auction technical charts, CBOT March wheat closed weaker Friday. While market bulls had a good week overall, there is strong overhead chart resistance at last week's high of US$9.11 1/2 per bushel, a technical analyst said. The bull's next upside objective is to close prices above solid technical resistance at US$9.00 per bushel. The next downside price objective remains closing prices below solid support at US$8.50 per bushel.

 

First resistance is seen at US$8.93 and then at US$9.00. First support is seen at US$8.75 and then at US$8.68, Friday's low.

 

March KCBT wheat hit a fresh seven-week high and then retreated to settle slightly lower. Market bulls still have the near-term technical advantage at this point and their next upside objective is closing prices above solid resistance at last week's high of US$9.28 per bushel. The bears' next downside price objective is closing prices below solid support at US$8.80.

 

First resistance is seen at US$9.15, and then at US$9.28. First support is noted at US$9.00 and then at US$8.90.

 

Deliveries posted against the December future were 960 contracts Monday. Large issuers included the customer account of Morgan Stanley which issued 300 contracts and the customer account of Credit Suisse, which issued 163 contracts. Large stoppers included the customer account of Kottke, which stopped 350 contracts, and the customer account of Man Professional Clearing, which stopped 217 contracts. The last trade assigned was Nov. 29.

 

Non-commercial speculative funds increased long CBOT wheat futures and options positions by 3,927 lots and cut short positions by 3,287 lots in the week ended Nov. 27, the Commodity Futures Trading Commission said in a supplemental report. The funds were net short 12,736 contracts, according to the CFTC. At the KCBT, speculative funds decreased long positions by 2,461 lots, short positions by 644 lots and were net long 28,023 contracts, the CFTC said in another supplemental report. At the Minneapolis Grain Exchange, speculative funds increased long positions by 1,674 lots, short positions by 156 lots and were net long 17,110 contracts, according to the CFTC.

 

In other wheat news, China's wheat prices were little change din the week ended Monday as an increased amount of government sales of stockpiled wheat helped alleviate supply shortages, market participants said.

 

Monday, the U.S. Department of Agriculture is scheduled to release the weekly export inspections report at 11:00 a.m. EST.