May 6, 2008

 

US Wheat Outlook on Tuesday: Seen steady to slighty up, looks to corn

 

 

U.S. wheat futures are expected to start Tuesday's trading session steady to slightly higher, following the lead of neighboring markets, floor traders said.

 

In overnight electronic trading, Chicago Board of Trade July wheat closed down 1/2 cent.

 

In the absence of fresh fundamental news to spur the wheat trade, a CBOT floor trader said he expects wheat to continue following corn and soybeans.

 

July corn ended up 3 cents at US$5.97 per bushel. July soybeans ended up 12 cents at US$12.98.

 

The trader said he anticipates a light volume trading day in wheat.

 

Plains wheat areas had some beneficial rains of more than 1 inch in southwestern Kansas through the Texas Panhandle Monday, according to DTN Meteorologix. Additional showers are in store for the region through the next week. This active rainfall pattern will favor the developing crop. Episodes of cold weather continue to bear watching, but no damaging cold is indicated at this time, the private weather forecasting service said.

 

"I think the weather here is bearish for wheat," a CBOT floor trader said, referring to the U.S.

 

The U.S. Department of Agriculture's weekly crop progress report, released Monday afternoon, said 47% of the winter wheat crop in the top producing states rated good to excellent. This compares with 46% a week earlier and 57% a year earlier.

 

CBOT July wheat prices are still in a six-week-old downtrend on the daily bar chart and the bears still have the near-term technical advantage, a 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.

 

First resistance is seen at Monday's high of US$8.17 and then at US$8.25. First support lies at Monday's low of US$7.99 and then at US$7.91.

 

In other wheat news, Pakistan will import 250,000 metric tonnes of wheat in the next three months to meet its local demand, a government official said Tuesday. In India, wheat stocks in state-run granaries, a key driver of the country's import program, were at 18.17 million metric tonnes as of May 1, up 6.57 million tonnes from a year earlier, a senior government official said Tuesday.

 

Production from Australia's grain crops including wheat is still anticipated to rebound sharply in 2008, though substantial rainfall is still required in many areas, National Australia Bank warned Tuesday.