April 21, 2009

 

US Wheat Outlook on Tuesday: Up 2-4 cents; support from crop progress

 

 

U.S. wheat futures are poised to open slightly higher Tuesday on support from Monday's crop progress report, traders said.

 

Chicago Board of Trade wheat is called 2 to 4 cents higher. In overnight trade, May CBOT wheat was up 4 1/4 cents to US$5.08 3/4 per bushel and July CBOT wheat was up 3 3/4 cents to US$5.20.

 

The crop progress report from the U.S. Department of Agriculture showed, as expected, that winter wheat conditions improved in Kansas, thanks to recent rains. But it also showed a significant drop in the condition of the crop in Texas and Oklahoma, where the portion of the crop rated poor or very poor increased 7% and 10% respectively.

 

The increase likely shows significant damage from recent freezing weather, traders said. But they cautioned that it will likely be weeks before the true extent of any freeze damage is known.

 

A floor trader also noted that overall, the portion of the crop rated good-to-excellent increased by two percentage points.

 

The report also showed spring wheat planting is falling further behind schedule.

 

The USDA said 6% of the spring wheat crop was planted as of Sunday, up from 2% last week but well behind the average of 21%. Last year the crop was 19% planted. The slow start is due to soggy conditions in the northern Plains.

 

North Dakota has yet to plant any wheat, according to the USDA. The average for this time of year is 12% planted, and the state had planted 14% last year.

 

"Forecasters are calling for rains to return over the weekend which would push back some thoughts that field work could get started on a limited basis late next week," Benson Quinn Commodities analyst Kevin R. Kjorsvik wrote in a market commentary.

 

The DTN Meteorlogix forecast calls for dry weather in the spring wheat belt through Thursday, with rain and snow developing in northern areas Friday and Saturday.

 

In other news, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 148,000 metric tonnes of wheat, including 86,000 tonnes of U.S. wheat, in a tender to be concluded Thursday, an agriculture ministry official said Tuesday.

 

The next downside price objective for the bears is pushing and closing July prices below solid technical support at the March low of US$5.10 1/4, a technical analyst said. The next upside price objective is to push and close July futures prices above solid technical resistance at last week's high of US$5.45 a bushel.

 

First resistance is seen at US$5.20 and then at US$5.27, the technical analyst said. First support lies at Monday's low of US$5.12 1/2 and then at US$5.