March 26, 2008

 

US Wheat Outlook on Wednesday: Seen firmer, following other markets

 

 

U.S. wheat futures are expected to start Wednesday's day session stronger on follow-through buying and leadership from other markets, traders said.

 

Benchmark Chicago Board of Trade May wheat is called to open 10 to 15 cents per bushel higher. In overnight electronic trading, CBOT May wheat finished 12 1/4 cents higher at US$10.79 3/4.

 

Wheat should feel spillover support from strength in the neighboring CBOT soy and corn markets, traders said. The soy complex, in particular, should offer solid leadership to the upside amid news that Argentina's farmers will continue a nationwide farm strike indefinitely, a CBOT floor trader said.

 

It also is bullish for the grains that crude oil and metals are firmer and that the U.S. dollar is weaker, traders said. A weaker U.S. dollar gives foreign countries more buying power.

 

"Wheat will be a follower again," a CBOT floor trader said.

 

It seems as though money flows are returning to the commodities after economic jitters sparked a sell-off last week, an analyst said. The markets will continue to rebound from last week's losses as traders look ahead to the release of a key U.S. Department of Agriculture planting intentions report, he said.

 

The USDA report, due out Monday, will offer forecasts for wheat, corn and soy plantings. The agency also will issue its estimates for quarterly grain stocks.

 

There was not much fresh news out for wheat overnight. Turkey's state grain board canceled a tender to buy 250,000 metric tonnes of U.S.-origin milling wheat because the quality was unsatisfactory, according to a media report. However, CBOT traders said they expected Turkey to tender again soon and that the grain board should buy U.S. wheat.

 

Bulls' next upside price objective is to push and close CBOT July wheat, which represents the new crop, above solid resistance at Tuesday's high of US$11.10, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below major psychological support at US$10.00, he said.

 

First resistance is seen at US$10.87 and then at US$11.00. First support lies at Tuesday's low of US$10.50 and then at US$10.30.

 

Weather for U.S. soft red winter wheat, traded at the CBOT, looks at though it will remain wet, traders said. A rainy weather pattern looks to continue over the eastern and southern Midwest, DTN Meteorlogix said. The Delta does not look to be very wet during the next five days, but it may get wetter again during the six-to-10 day period, the private weather firm said.

 

Top soils and sub-soils in hard red winter wheat areas of the western Plains will continue to trend drier this week, Meteorlogix said. There may be some rain in the region next week, but it may favor eastern and south-central locations rather than the west.