February 9, 2010

 

US Wheat Outlook on Tuesday: Seen higher, following CBOT corn, soy

 

 

U.S. wheat futures are poised to start stronger Tuesday on follow-through buying from the overnight session and support from other markets.

 

Chicago Board of Trade March wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT March wheat rose 2 cents to US$4.86.

 

Wheat is expected to follow CBOT corn and soybeans higher after the U.S. Department of Agriculture issued a crop report that was seen as friendly to the row crops and neutral to wheat. Corn is called to start 5-7 cents higher, and soybeans are seen starting 7-10 cents higher.

 

"I think wheat will go along for the ride," said Vic Lespinasse, analyst for grainanalyst.com.

 

The USDA, in its February supply and demand report, pegged U.S. wheat ending stocks at 981 million bushels, compared to the average pre-report analyst estimate of 973 million and to USDA's January estimate of 976 million. Although the average of estimates indicated a dip in carryout was possible, a majority of analysts surveyed by Dow Jones Newswires ahead of the report said they expected to see an increase.

 

U.S. wheat ending stocks for 2009-10 were projected five million bushels higher than last month due to an increase in expected imports. Imports were raised based on expected shipments of South American and European feed quality wheat into the southeastern U.S. market.

 

The estimate for total U.S. wheat exports was unchanged. However, by-class adjustments included a 10-million-bushel increase in hard red winter wheat and 5-million-bushel decreases in both hard red spring and durum wheat.

 

The USDA increased its estimate for world wheat ending stocks to 195.9 million tonnes from last month's estimate of 195.6 million. It was already well known that U.S. and world wheat ending stocks were large.

 

"The numbers are neutral on wheat," a CBOT floor trader said.

 

The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at the October low of US$4.59, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.04, he said.

 

First resistance is seen at Monday's high of US$4.89 and then at US$5.00, the technical analyst said. First support lies at Monday's low of US$4.76 1/4 and then at last week's low of US$4.66 1/2, he said.

 

In other news, Japan said it was seeking 105,000 tonnes of wheat, including 65,000 tonnes from the U.S., in a routine tender to be concluded Wednesday. The wheat is expected to arrive April 1 to April 13.