March 9, 2009

U.S. wheat futures are seen steady-to-mixed at the open of Monday's trading session, supported by gains overnight, but with uncertainty added by negative equity futures and a stronger U.S. dollar.

 

In overnight electronic trading, CBOT May wheat added 3 cents to US$5.30 a bushel; July wheat gained 2 cents to US$5.40 3/4. Kansas City Board of Trade May wheat rose 6 cents to US$5.80. Minneapolis Grain Exchange May wheat added 4 cents to US$6.17.

 

"Crude oil is higher, but not much, while the dollar is stronger and the equities are down," said analyst Vic Lespinasse of grainanalyst.com.

 

Despite potential headwinds from the outside markets, Lespinasse said the overnight gains lead him to look for a steady-to-mixed opening.

 

The U.S. Department of Agriculture is due to release an updated supply and demand report Wednesday at 7:30 a.m. EDT.

 

"No big changes on old crop stocks are expected from the USDA report, with the condition of winter wheat the top concern right now," Bryce Knorr, Farm Futures senior editor, in a market commentary.

 

"While dry areas in the southwest Plains are forecast to remain dry this week, other areas to the north, east and southeast have better chances for precipitation," Knorr said. "Traders also will keep an eye on a cold front Wednesday and Thursday that could threaten some areas that have already emerged from dormancy."

 

Wheat deliveries against the CBOT March contract totaled 470 lots. A customer account at Fortis Americas was the primary issuer at 237 lots. A customer account at the Astros Division of UBS.

 

Knorr noted that "there again are no deliveries in Minneapolis, supporting the big inverse in the March/May."

 

A two-month-old downtrend still defines the CBOT daily wheat price bar chart, a market technician said.

 

Bears are aiming to close May futures prices below solid technical support at last week's low of US$4.98 1/2, pegging first support at US$5.20 and then at Friday's low of US$5.12.

 

The bulls are pressing to close May futures prices above solid technical resistance at last week's high of US$5.50 a bushel, the market technician said, placing first resistance at US$5.33 and then at US$5.44 1/2. Non-commercial speculative funds increased short CBOT wheat futures and options positions by 6,389 contracts, leaving them net short 44,338 contracts as of March 3, the CFTC says in a supplemental report. Index traders increased short CBOT wheat positions by 1,114 contracts, leaving them net long 132,503 contracts. Commercials decreased short positions by 3,109, leaving them net short 69,916 contracts.

 

In global trading news, Agriculture and Agri-Food Canada has revised downward what Canadian producers will seed to all wheat and durum in the spring from its January projection, according to an updated acreage outlook released Friday by the market analysis branch of Agriculture and Agri-Food Canada.

 

The government pegged seeded area to all wheat at 23.237 million acres with durum accounting for 4.942 million acres of the amount. All wheat area in January was put at 23.895 million acres while durum was initially estimated at 5.609 million acres. The record canola area forecast in January was bumped even higher.

 

Meanwhile, in Brazil wheat acreage is increasing.

 

Brazil's 2008-09 wheat crop should be 47.2% greater than last season's crop, for a total output of 6.03 million metric tonnes, the National Commodities Supply Corp., or Conab, said Monday.

 

The estimate is steady from Conab's last data on Feb. 5.

 

In China, local wheat prices in the major producing areas were mostly stable in the week to Monday, but some areas saw prices fall as farmers sold more grain.