April 28, 2008

 

US Wheat Outlook on Monday: Seen firmer on overnight, spillover

 

 

U.S. wheat futures are poised to start Monday's day session higher on spillover support and in a technical rebound from recent setbacks, traders said.

 

Chicago Board of Trade July wheat is called to open 10 to 12 cents per bushel higher. In overnight electronic trading, July wheat rose 13 1/4 cents to US$8.28 3/4.

 

Gains in the neighboring CBOT corn and soybean markets are supportive for wheat, traders said. The wheat markets also are technically oversold after recent setbacks and due for a bounce, an analyst said.

 

There was some scattered demand news out during the weekend, with Iraq's Grain Board saying it is tendering to buy at least 50,000 tonnes of wheat in a tender. The board said it was seeking wheat from all origins and that the final quantity would be specified by the buyer.

 

The board set May 3 as the closing date for bids, which will be valid until May 8. No shipment dates were given.

 

Traders are waiting for the U.S. Department of Agriculture to issue its weekly crop progress report, due out at 4 p.m. EDT. The good-to-excellent rating for winter wheat is seen rising slightly following recent rains in the Plains, analysts said. The USDA also will update its estimate for spring wheat planting.

 

A weekend drop in temperatures in winter wheat areas of the central and southern Plains probably didn't cause much damage to the crop, DTN Meteorlogix said. The development of the crop "is not far enough along to be hurt by these temperatures," the private weather firm said.

 

Snow and rain are expected to return to central and eastern spring wheat areas of the northern Plains later this week, Meteorlogix said. The precipitation should help to recharge soil moisture, although the cold and damp conditions may delay seeding, the weather firm said.

 

The bulls' next upside price objective is to push and close CBOT July wheat, which represents the new soft red winter wheat crop, above solid technical resistance at last week's high of US$8.75, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below major psychological support at US$8.00, he said.

 

First resistance is seen at Friday's high of US$8.37 and then at US$8.50. First support lies at Friday's low of US$8.14 and then at US$8.00.

 

Wheat prices in China's producing regions were mostly stable in the week to Monday, with prices in some areas higher on limited stocks. The government's weekly sales of wheat have helped support wheat prices, though demand for wheat flour is not strong.

 

In other news, wheat stocks held in storage facilities operated by Australia's major bulk grain handling companies and traders fell 9.0% on month in March to 7.1 million metric tonnes, according to the Australian Bureau of Statistics. Stocks of winter grains and oilseeds typically rise after the annual harvest from October through December, and then decline steadily through the year, reflecting exports and domestic use.