December 18, 2007

 

US Wheat Outlook on Tuesday: Mixed; two-sided trade expected

 

 

U.S. wheat futures are predicted to begin trading mixed Tuesday, following a choppy overnight session and the volatile activity seen in Monday's trade, an analyst said.

 

In overnight electronic trading, CBOT March wheat ended 1/4 cent lower at US$9.65 3/4 cents per bushel and KCBT March hard red wheat finished unchanged at US$9.85 1/2 per bushel.

 

The market could see another two-sided trading session following Monday's rally to new all-time highs and subsequent declines, a commission house analyst said. There continues to be world wheat business being done but the weather in the U.S. winter wheat growing areas is favorable with both the hard red and soft red wheat crops recently receiving moisture, the analyst said.

 

Japan is expected to tender later this week for 285,000 metric tonnes of either U.S. or Canadian wheat, Pakistan is expected to tender for wheat either late this week or early next week and India might re-tender for 285,000 metric tonnes of wheat, a trader said.

 

On daily open auction technical charts, CBOT March wheat hit a fresh contract and a new all-time high of US$10.09 1/2 Monday before retreating and closing near the session low Monday. Strong follow-through selling on Tuesday would confirm a bearish buying "exhaustion tail" on the daily bar chart, where buying interest dries up at higher levels and prices back down, a technical analyst said.

 

The market could also see bulls take profits ahead of the end of the year, though bulls have the solid near-term technical advantage. The bull's next upside price objective is too close prices above the contract high of US$10.09 1/2 per bushel. The downside price objective remains 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$10.00. First support is seen at US$9.65 and then at US$9.50.

 

March KCBT wheat also hit a fresh contract high and established an all-time high of US$10.19, before backing off sharply to end near the session low. No serious chart damage occurred Monday but strong follow through selling would confirm a "bearish exhaustion tail" on the daily bar chart, the technical analyst said. The next upside price objective in March is to push and close prices above resistance at US$10.19 per bushel the contract and all-time high. The bears' next downside objective is remains closing prices below support at last week's low of US$9.48.

 

First resistance is seen at US$10.00 and than at US$10.19. First support is seen at US$9.83 and then at US$9.62.

 

In other wheat news, India's wheat production may reach 75.5 million metric tonnes in the financial year that begins April 1, the Indian government said Tuesday. "If the current weather conditions continue favorably as required by the wheat crop, there will be no problem in achieving the production target of 75.5 million tonnes as fixed by us," the government said in a statement.