US Wheat Outlook on Monday: Up on spillover, firming world values

 

 

Chicago Board of Trade March wheat is called to open 10 to 12 cents per bushel higher. In overnight electronic trading, CBOT March wheat gained 12 1/4 cents to US$5.95.

 

CBOT wheat should feel borrowed strength from the rest of the trading floor, a floor broker said. Corn and soybeans expected to rise at the opening after trading higher overnight.

 

Short-covering could help support the gains, traders said. Speculative funds were net short nearly 30,000 contracts in CBOT wheat as of Jan. 20, according to the Commodity Futures Trading Commission's supplemental Commitments of Traders report.

 

"Despite the fact that trend-following funds are back on the sell side in the latest Commitments of Traders report, other sellers appear to be on the sidelines," Fortis said in a research note.

 

Rising world wheat prices should help provide a floor for U.S. wheat, a CBOT trader said. U.S. wheat has become more competitive on the global export market as prices have firmed in other areas, including the Black Sea region, analysts said.

 

Iraq is planning to announce a new tender in February to buy large quantities of wheat, according to a statement from the Iraqi Trade Ministry. The Iraqi Grain Board will purchase enough wheat to cover the country's needs for the first half of 2009 at the tender, it said.

 

"World values have been firming up," the CBOT trader said. That should keep U.S. wheat prices "from crashing and burning," he said.

 

Warmer temperatures will favor dormant winter crops in Ukraine and southern Russia, but some of a protective snow cover in the region will melt away, private weather firm DTN Meteorlogix said in a forecast. Colder weather that will hit the U.S. Plains early this week doesn't look cold enough to harm crops, the forecast said.

 

"Dryness is of increasing concern through the southern and west-central crop areas" in the U.S. Plains, Meteorlogix said. "There is little precipitation expected in these areas during the next 10 days."

 

The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at the January low of US$5.48 1/4, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.00, he said.

 

First resistance is seen at Friday's high of US$5.96 and then at US$6.00. First support lies at US$5.80 and then at US$5.70.