September 11, 2007

 

US Wheat Outlook on Tuesday: Mixed to start, statscan seen supportive

 

 

U.S. wheat futures are expected to start Tuesday's day session mixed, with support from a bullish Statistics Canada stocks estimate and strong demand, analysts said.

 

Trading is expected to be two-sided amid some pressure from ideas that light showers may boost Australia's dry wheat fields, traders added.

 

In e-CBOT overnight trading, Chicago Board of Trade December wheat fell 1 cent to US$8.60 per bushel, and Kansas City Board of Trade December wheat rose 4 3/4 cents to US$8.33 3/4.

 

Statistics Canada said all wheat stocks as of July 31 were 6.828 million metric tonnes, below pre-report trade estimates of 7-8 million. The forecast is "another bullish factor for wheat" as world supplies are already at historically tight levels, a CBOT floor broker said.

 

Demand still looks strong, despite high prices, traders said. Japan said it was seeking 155,000 metric tonnes of wheat, including 95,000 from the U.S., in a routine tender to be concluded Thursday for shipment Oct. 1-Nov. 15. Iraq is also still reportedly shopping around for wheat, the broker said.

 

The markets are keeping a close eye on the weather in Australia amid concerns that dry weather will slash the country's wheat output. It looks as though there is the potential for some more rain this week, but larger concerns about Australian production are still present, an analyst said.

 

Rainfall in Victoria yesterday fell mainly east of the wheat belt, according to DTN Meteorlogix. Showers are possible Wednesday through the southern part of the western wheat belt, the weather firm said.

 

Production from a new wheat crop in Victoria could still reach a record 4.4 million metric tonnes with only an average finish to the growing season, an agronomist with the Department of Primary Industries said. A poor finish to the season would see state wheat production around 2.5 million tonnes, while an excellent finish could yield 5.5 million tonnes of wheat, he said.

 

The next chance for showers in southeastern Australia is Thursday or Friday, but they would mostly be light, Meteorlogix said. The next chance for showers over the more northerly locations in the east appears to be Sunday, which also would probably be mostly light, the firm said.

 

In Argentina, the northern and eastern wheat areas will see moderate or locally heavy rains during the next three to five days, Meteorlogix said. The very dry areas of La Pampa and western Buenos Aires may see significant rains Wednesday night into Thursday.

 

Bulls still have solid technical power in the wheat markets, a technical analyst said. Their next upside price objective is to push and close CBOT December wheat above psychological resistance at US$9.00. The next downside price objective for the bears is closing prices below psychological support at US$8.00, he said.

 

First resistance is seen at US$8.72 and then at US$9.00. First support lies at Monday's low of US$8.52 1/2 and then at US$8.35 1/2.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is closing December wheat above resistance at US$8.50. The bears' next downside objective is closing prices below solid support at US$8.10, which would fill on the downside Monday's upside price gap on the daily bar chart. First resistance is seen at Monday's contract high of US$8.37 1/2 and then at US$8.50. First support is seen at Monday's low of US$8.22 and then at US$8.10.