March 2, 2009
US Wheat Outlook on Monday: Seen lower on bearish outside markets
Bearish signals from outside markets and worries about the struggling global economy are expected to pull down U.S. wheat futures Monday.
Chicago Board of Trade wheat futures are called to open 5 to 7 cents per bushel lower. In overnight electronic trading, nearby CBOT March wheat fell 7 3/4 cents to US$5.02 3/4.
Losses in crude oil and strength in the U.S. dollar should weigh on the grains, traders said. A stronger dollar makes U.S. grains less attractive to foreign buyers.
"Definitely everybody's got 1 1/2 eyes on the outside markets," a CBOT floor trader said.
The influence of the outside markets should trump supportive concerns about dryness in the U.S. central and southern Plains, the trader said. The DTN Meteorlogix forecast doesn't include many chances for significant rainfall in dry areas during the next seven to 10 days.
"Rain is still needed to help replenish soil moisture for spring growth, especially in parts of southwest Kansas, Oklahoma and Texas," Meteorlogix said.
In other news, deliveries against the CBOT March wheat future remain heavy, a trader said. Deliveries were 3,726 contracts on Monday and 3,909 contracts on Friday, which was first notice day.
Non-commercial speculative funds increased short CBOT wheat futures and options positions by 2,862 contracts in the week ended Feb. 24, leaving them net short 37,240 contracts, the Commodity Futures Trading Commission said in a supplemental Commitments of Traders report. Index funds cut long CBOT wheat positions by 2,130 contracts and were net long 132,720 contracts, it said.
Wheat has seen a sideways to lower bias on technical charts for the last several weeks and should continue in that pattern, a trader said. CBOT May wheat Friday closed at US$5.21 1/2, a bearish weekly and monthly low close on Friday, a technical analyst said.
The next downside price objective for the bears is pushing and closing CBOT May wheat below solid technical support at US$5.00, the analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.50, he said.
First resistance is seen at Friday's high of US$5.28 1/2 and then at US$5.35. First support lies at the February low of US$5.15 1/2 and then at US$5.00.
