December 13, 2006

 

US Wheat Outlook on Wednesday: Steady to lower start on Lack of news

 

 

U.S. wheat futures are expected to start Wednesday's day session steady to lower on flat overnight trade and a lack of fundamental news to direct prices, traders said.

 

Benchmark Chicago Board of Trade March wheat is called to open steady to lower.

 

In e-cbot overnight trade, CBOT March wheat was flat at US$4.82 a bushel.

 

CBOT corn and soybeans futures were weaker overnight and may put pressure on wheat during the day session, a floor trader noted. Also, wheat futures ended lower Tuesday on a lack of fundamental support and there was little fresh news out overnight, the trader added.

 

A technical analyst agreed CBOT March wheat is suffering from a lack of bullish fundamental news. Bears have downside technical momentum at CBOT, he said.

 

The next downside price objective for the bears is closing prices below support at US$4.65, the analyst said. The bulls' next upside price objective is to close prices above solid resistance at US$5.00 a bushel.

 

First resistance is seen at Tuesday's high of US$4.92 1/2 and then at US$5.00. First support lies at Tuesday's low of US$4.81 and then at US$4.75, the analyst said.

 

At the Kansas City Board of Trade, the bears' next downside objective is closing March wheat prices below solid support at US$5.00. The bulls' next upside price objective is closing prices above solid technical resistance at US$5.25, the analyst said.

 

First resistance is US$5.10 and then at Tuesday's high of US$5.13. First support is seen at this week's low of US$5.01 and then at US$5.00, the analyst said.

 

Hard red winter wheat, which is traded at KCBT, will see mainly dry and mainly very warm weather in the U.S. Southern Plains for the next five days, the DTN Meteorlogix weather firm reported. There also is a promise of beneficial precipitation in HRW wheat regions, especially central and eastern areas, the firm added.

 

In the eastern Midwest, warm temperatures and some rainfall favors wheat, although those conditions may leave the crop more susceptible to damage in the event of a turn to much colder weather, Meteorlogix said.

 

Some hot weather is forecast in Argentina during the next five days, although shower activity is also possible, the weather firm said.

 

In China, crops continue to enter dormancy under a colder than normal pattern, Meteorlogix reported. Precipitation chances during the next seven days are limited and mainly in the south, the firm noted.

 

China said it wants aims to maintain the stability of its grain price at a reasonable level after a recent increase. China will monitor price changes in the grain market and take timely measures, according to a statement from the government.

 

The recent grain price rise was due to international market conditions and domestic transportation costs, and is a "reasonable pickup" after a two year decline, the statement said.

 

In other news, India's wheat output is likely to reach 74 million metric tonnes in 2007, up from an estimated 69.48 million tonnes this year, an official said. The government will concentrate on building local buffer stocks before pushing wheat exports, the official said.

 

A U.S. senator, meanwhile, has called on the Commodity Futures Trading Commission to consider revoking or suspending Australian wheat exporter AWB Ltd.'s permission to participate in U.S. futures markets, an Australian newspaper reported Wednesday. The commission has been asked to consider the move if AWB is found to have violated U.S. law as part of a scandal involving kickbacks from Iraq, the report said.

 

AWB operates currency and commodity hedging programs to support its operation of a wheat export monopoly from Australia. It is one of the biggest participants in the CBOT wheat futures market, sources said.