August 6, 2008


US Wheat Outlook on Wednesday: 4-6 cents Higher on follow-through, demand



U.S. wheat futures are poised to start Wednesday's day session higher on technical buying and bullishness about the steady pace of export business, analysts said.


Chicago Board of Trade September wheat is called to open 4 to 6 cents per bushel higher. In overnight electronic trading, CBOT September wheat jumped 7 1/4 cents to US$7.87 1/4 per bushel, while CBOT December wheat rose 5 1/2 cents to US$8.10 1/4.


Follow-through momentum from the overnight should help carry wheat higher at the opening of trading after the markets ended firmer Tuesday on short-covering and demand strength, traders said. There are ideas wheat put in a short-term bottom Tuesday, with CBOT September wheat touching a session low of US$7.49, its lowest price since May 29.


Wheat should continue to feel support from solid U.S. export sales seen in recent weeks, a trader said. There are ideas U.S. wheat is more competitive on the global marketing following a setback in prices, he said.


"We emptied out the pipeline in the world this last year because (wheat) supplies were so tight," an analyst said. "You have this need to refill the pipeline."


CBOT December wheat scored a bullish "outside day" up on the daily bar chart Tuesday, a technical analyst said. However, bears still have the overall near-term technical advantage in wheat, he said.


The wheat markets also could struggle to rally if CBOT corn and soybeans stay on the defensive, a trader said. The row crops were modestly lower overnight.


The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at the May low of US$7.68, the technical analyst said. The bulls' next upside price objective is to push and close December futures prices above solid technical resistance at Tuesday's high of US$8.31 1/2, he said.


First resistance is seen at US$8.10 and then at US$8.20. First support lies at US$7.98 and then at US$7.80.


There was not much fresh news out for the wheat markets overnight. Traders continue to look ahead to upcoming U.S. Department of Agriculture crop reports, due out Tuesday, an analyst said.


In the U.S. northern Plains, the spring wheat crop is "now maturing, with the harvest underway under favorable weather conditions," DTN Meteorlogix said. Spring wheat on the Canadian Prairies, meanwhile, will see generally favorable weather, the private weather firm said.


Australia's crop also is seeing mostly favorable weather, with light showers during the next five days possible in the southeast, Meteorlogix said. Wheat in Argentina could receive some needed rain around Monday, the firm said.


Near-normal rainfall in July 2008 over large parts of southern Australia, along with unseasonable winter rains in eastern Queensland, brought some relief to short-term rainfall deficiencies, the government's Bureau of Meteorology said. However, the precipitation made little impact on moisture deficiencies that accumulated in the 14 months prior to July 31, it said.

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