December 19, 2007

 

US Wheat Outlook on Wednesday: 10-15 cents higher, following e-CBOT gains

 

 

U.S. wheat futures are expected to start trading 10 to 15 cents higher Wednesday, boosted by higher prices in overnight activity and speculative buying, an analyst said.

 

In overnight electronic trading, CBOT March wheat gained 15 cents to US$9.67 per bushel and KCBT March hard red wheat rose 9 1/2 cents to US$9.81 per bushel.

 

Wheat should be higher based on the overnight activity as it appears that speculative interests want to buy price breaks, a trader said. Technically, long-term charts remain bullish and that will continue to support prices in the near term, the trader said.

 

Despite the rally in overnight activity, wheat could experience wide price swings similar to Tuesday's session, a commission house analyst said. World wheat demand remains strong and there are concerns about India's wheat crop. However, new crop wheat values have come under pressure recently as the U.S. winter wheat crop has received favorable moisture which is contributing volatility to two-sided trade on old crop-new crop spreading, a commission house analyst said.

 

On daily open auction technical charts, CBOT March wheat closed lower and near the session low. A bearish buying "exhaustion tail" on the daily chart was confirmed Tuesday, where buying interest dried up at higher levels Monday, a technical analyst said. This is a very early clue that a market top is in place. The market could also see some profit taking before the end of the year.

 

Market bulls still have the technical advantage, with the next upside price objective to close prices above strong resistance at the contract high of US$10.09 1/2 per bushel. The next downside price objective for bears is closing prices below last week's low of US$9.09 per bushel.

 

First resistance is seen at US$9.66 1/2 and then at Tuesday's high of US$9.75. Fist support is seen at US$9.47 and then at US$9.40.

 

March KCBT wheat also closed lower and near the session low with Tuesday's strong selling confirming an "exhaustion tail" on the daily chart. However, market bulls still have the near-term technical advantage at present, the technical analyst said. The next upside price objective in March remains pushing and closing prices above resistance at US$10.19 per bushel, the contract and all-time high. The bears' next downside objective is closing prices below support at last week's low of US$9.48.

 

First resistance is seen at US$9.80 and than at US$9.92, Tuesday's high. First support is seen at US$9.66 and then at US$9.60.

 

In other wheat news, India's federal government hasn't made a final decision on whether to hold any fresh wheat import tenders, the country's Farm Minister said Wednesday, after the government failed to buy as much as planned in its last three tenders.

 

India has purchased around 492,500 tonnes of wheat against a target of 1 million tonnes by March.