December 24, 2007

 

US Wheat Outlook on Monday: 3-5 cents weaker on canceled tenders

 

 

U.S. wheat futures are expected to start Monday's day session weaker amid concerns about cancelled tenders from Egypt and India, traders said.

 

Chicago Board of Trade March wheat is called to open 3 to 5 cents per bushel lower. In e-cbot overnight trading, CBOT March wheat fell 7 1/2 cents to US$9.41 1/2.

 

Egypt's state-owned General Authority for Supply Commodities on Saturday canceled a tender to buy at least 55,000 to 60,000 metric tonnes of wheat for shipment Jan. 21-31 but did not provide a reason. GASC issued the tender Friday, and bids showed offers from the U.S., Russia and a little from Kazakhstan.

 

India's government-owned State Trading Corp., meanwhile, is expected to cancel a tender to import 350,000 metric tonnes of wheat on behalf of the federal government. The government has not communicated with the firm during the time in which the bids were valid, a company official said.

 

State Trading Corp. had floated a tender earlier this month to import wheat on behalf of the federal government and received only three bids from global trading firms at prices ranging between US$459.90 and US$579.62 per metric tonne, basis cost and freight. The bids were rejected as prices were too high, the official said.

 

Cancelled tenders are seen as bearish for U.S. wheat futures because they indicate demand is slowing down at high prices, an analyst said.

 

"It looks like some of the big guys might be jawboning the price lower by canceling some of their" tenders, a CBOT floor trader said.

 

Volume is expected to be thin Monday, with many traders absent ahead of the Christmas holiday. Trading at the CBOT, Kansas City Board of Trade and Minneapolis Grain Exchange will close at 1 p.m. EST.

 

"It should be a ho-ho-ho hum day," a CBOT floor broker said.

 

The bulls' next upside price objective is to push and close CBOT March wheat above strong technical resistance at the contract high of US$10.09 1/2, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$9.23.

 

First resistance is seen at Friday's high of US$9.60 and then at US$9.70. First support lies at Friday's low of US$9.41 1/2 and then at US$9.30.

 

At the Kansas City Board of Trade, bulls' next upside price objective is pushing and closing March wheat above psychological resistance at US$10.00, the technical analyst said. The bears' next downside objective is closing prices below solid technical support at US$9.50.

 

First resistance is seen at Friday's high of US$9.79 and then at US$9.90. First support is seen at Friday's low of US$9.62 and then at US$9.50.