May 5, 2008

US Wheat Outlook on Monday: Seen 2-4 cents higher on technical rebound

U.S. wheat futures are expected to start Monday's day session higher as prices rebound after a sell-off in the last several weeks, an analyst said.

CBOT July wheat is called to open 2 to 4 cents higher per bushel. In overnight electronic trading, CBOT July wheat closed up 1 3/4 at US$8.10 3/4.

Weather conditions are generally favorable for soft red winter wheat, except for some disease concerns through Missouri and Arkansas due to wetness, DTN Meteorlogix said. Crop development continues behind normal, with no damaging cold expected for either the soft or hard winter wheat crops, the private weather firm said.

The U.S. Department of Agriculture at 4 p.m. EDT is slated to release the weekly crop progress report. Some traders expect to see a slight improvement in the winter wheat condition rating.

Scattered showers forecast around the U.S. northern Plains would benefit early spring wheat planting, while the outlook calls for normal to below normal temperatures in areas where planting would be boosted by warmer temperatures, Meteorologix said.

Uncertainty in Argentine export markets is providing some price support, as Brazil is buying supplies from the new U.S. crop, a floor trader said. The trader also said an Iraqi drought may add some cash basis firmness for Kansas City Board of Trade wheat.

Prices are still in a seven-week-old downtrend on the daily bar chart, giving bears near-term technical advantage, a technical analyst said.

The bulls' next objective is to push and close CBOT July wheat above solid technical resistance at last week's high of US$8.43, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below strong technical support at last week's low of US$7.77, he said.

First resistance is seen at Friday's high of US$8.13 and then at US$8.25, the analyst said. First support lies at US$8.00 and then at Friday's low of US$7.91.