December 5, 2007

 

US Wheat Outlook on Wednesday: Steady start amid solid global demand

 

 

U.S. wheat futures are expected to start Wednesday's day session steady amid solid global demand, but news that Egypt bought Russian wheat shouldn't be much help to bulls, analysts said.

 

In e-cbot overnight trading, Chicago Board of Trade March wheat slipped 1 1/2 cents to US$8.92 1/2 per bushel.

 

Egypt's main wheat buyer, the state-owned General Authority for Supply Commodities, said Wednesday it bought 60,000 metric tonnes of Russian wheat in a tender. The wheat was purchased at US$337.49/tonne from Aston for delivery Dec. 25-Jan. 10 on a free-on-board basis, an official said.

 

Russia's sale to Egypt doesn't look like it will lend any support to U.S. wheat futures, but there is still other business around, said Vic Lespinasse, analyst with Illinois Grain.

 

Morocco's state wheat buyer, the Office National Interprofessional des Cereales et des Legumineuses, said Wednesday it was tendering to buy 314,000 metric tonnes of soft milling wheat, of any origin, from importers inside the country. The deadline for bids is Dec. 18, with wheat to be delivered before Jan. 20.

 

Turkey's state grain board TMO said Tuesday it would hold a tender Thursday to buy 200,000 metric tonnes of soft wheat. The results of the tender are expected to be released Friday.

 

India's State Trading Corporation might float its wheat tender by next week, a senior company official said Monday. Japan is seeking 195,000 metric tonnes of wheat, including 150,000 from the U.S., in a routine tender to be concluded Thursday.

 

Follow-through buying from a strong close Tuesday also could help support wheat during the day session, a CBOT trader said. Bulls have regained solid upside technical momentum, although last week's high of US$9.11 1/2 for CBOT March wheat offers "very strong" overhead technical resistance, a technical analyst said.

 

Bulls' next upside price objective is to push and close CBOT March wheat above solid technical resistance at US$9.00, he said. The next downside price objective for the bears is pushing and closing prices below solid support at this week's low of US$8.66.

 

First resistance is seen at US$9.00 and then at US$9.11 1/2. First support lies at US$8.85 and then at Tuesday's low of US$8.75.

 

At the Kansas City Board of Trade, bulls' next upside price objective is pushing and closing March wheat above solid resistance at last week's high of US$9.28. The bears' next downside objective is closing prices below solid technical support at this week's low of US$8.88. First resistance is seen at Tuesday's high of US$9.15 and then at US$9.28. First support is seen at US$9.00 and then at US$8.88.

 

At the Minneapolis Grain Exchange, there are ideas that December wheat could hit US$10 in the near-term. The contract set a new all-time high of US$9.80 on Tuesday.