February 2, 2009

U.S. wheat futures are poised to slip at the start of Monday's day session on a lack of strong demand and borrowed weakness from other markets.

 

Chicago Board of Trade March wheat is called to open 4 to 6 cents per bushel lower. In overnight electronic trading, CBOT March wheat fell 5 cents to US$5.63.

 

Wheat should feel spillover pressure from expected losses in CBOT soybeans and corn, which stumbled overnight, and from weak outside markets, a trader said. It looks bearish for the row crops that forecasts are predicting more rain than expected in dry areas of Argentina, he said.

 

"Right now, the market just seems to be taking a breather," a CBOT trader said about wheat.

 

Strength in the U.S. dollar is seen as bearish because it makes U.S. wheat less attractive to foreign buyers, traders said. World demand is strong for wheat, but there is a lack of fresh news and world supplies are "ample," a trader said.

 

Trading Corporation of Pakistan has extended the deadline for submitting bids for a 250,000-metric tonne U.S. wheat tender to Feb. 7, according to the company's Web site said. This is the third extension of the deadline.

 

The deadline for bidding in a separate tender by the corporation - to buy 150,000 tonnes of optional-origin wheat - expired Jan. 31. It received total bids for 250,000 metric tonnes, a trader said.

 

Looking at U.S. weather, conditions continue to look dry in the U.S. central and southern Plains, where farmers grow hard red winter wheat, according to forecasts. There is little chance for significant moisture in southwest Kansas, Oklahoma or Texas during the next five days, private weather firm DTN Meteorlogix said.

 

CBOT March wheat could run into some technical support in the area around US$5.57 to US$5.60, a floor trader said. Short-covering also could emerge as a supportive factor, he said. Speculative funds were net short 24,652 contracts in CBOT wheat as of Jan. 27, according to a supplemental Commitments of Traders report from the Commodity Futures Trading Commission.

 

Wheat's weak close Friday could help set the tone for Monday, a trader said. CBOT March wheat on Friday "closed lower, near the session low and closed at a bearish weekly low close," a technical analyst said.

 

"Bears still have the overall near-term technical advantage," he said.

 

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, the analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at last week's high of US$6.11, he said.

 

First resistance is seen at US$5.75 and then at US$5.90. First support lies at Friday's low of US$5.66 1/4 and then at US$5.60.