December 17, 2007

 

US Wheat Outlook on Monday: 15-20 cents higher, following overnight gains

 

 

U.S. wheat futures are expected to start trading 15-20 cents higher Monday, as follow through from the sharp gains posted in overnight activity are expected to boost prices, analysts said.

 

In overnight electronic trading, CBOT March wheat surged 21 1/2 cents to US$10.01 per bushel, KCBT March hard red wheat rallied 19 3/4 cents to 10.19 per bushel.

 

Wheat should open to the upside, following the sharp gains seen in overnight activity with CBOT March wheat rallying to a new life of contract high and over US$10.00 per bushel, a CBOT commercial analyst said. World wheat supplies continue to remain tight, but that is considered by many to be "old news." However, the speculative trader continues to want to own wheat and that is supporting prices at these high levels, the analyst said.

 

Technical buying and speculative buying overnight boosted CBOT March wheat overnight and it appears that it will supply support to prices in day time trading as well, a commission house analyst said.

 

"Short position holders are definitely on the ropes this morning," the analyst said.

 

Both the U.S. hard red and soft red winter wheat belts received beneficial moisture over the weekend, alleviating some concerns over dryness in the U.S. central plains, DTN Meteorlogix Weather said.

 

On daily open auction technical charts, CBOT March wheat hit a fresh contract high Friday and has the solid technical advantage, a technical analyst said. The bull's next upside price objective is to close prices above major psychological resistance at US$10.00 per bushel. The downside price objective is closing prices below last week's low of US$9.09 per bushel.

 

First resistance is seen at Friday's high of US$9.81 and then at US$9.90. First support is seen at US$9.66 1/2 and then at US$9.50.

 

March KCBT wheat closed at a fresh contract high close Friday and market bulls continue to have the technical advantage, the analyst said. The next upside price objective in March is to push and close prices above resistance at US$10.25 per bushel. The bears' next downside objective is to close prices below support at last week's low of US$9.48.

 

First resistance is seen at US$10.03 and than at US$10.10. First support is seen at US$9.90 and then at US$9.88.

 

Speculative traders increased their short CBOT wheat futures and options positions by 7,123 contracts, while boosting their long positions by 4,803 contracts and are now net short 15,261 contracts as of Dec. 11, the Commodity Futures Trading Commission said Friday in a supplemental report.

 

Large commercial traders boosted their short holdings by 8,886 contracts and increased their long holdings by 5,458 contracts and are now net short 156,031 contracts. Large index funds increased their long positions by 3,092 contracts and trimmed their short positions by 564 contracts and are now net long 197,997 contracts.

 

At the KCBT, speculative funds increased long positions by 2,763 lots, and trimmed short positions by 436 lots and were net long 34,663 contracts, the CFTC said in another supplemental report. At the MGE, the funds decreased long positions by 607 lots, and short positions by 349 contracts and are net long 18,841 contracts, according to the CFTC.

 

In other wheat news, India's State Trading Corporation received only 3 bids totaling 330,000 metric tonnes of wheat in its latest import tender, a senior company official said Monday.