May 6, 2009

 

US Wheat Outlook on Wednesday: Firmer start, following soybeans and corn

 

 

U.S. wheat futures are called to open slightly higher Wednesday based upon overnight electronic trading and on firmer corn and soybean futures prices overnight.

 

Chicago Board of Trade wheat futures are called to open up 2 to 4 cents. In overnight electronic trading, July Chicago wheat last traded up 1 3/4 cents at US$5.55 1/4 a bushel.

 

"We'll probably see some lingering technical support and follow-through buying strength in wheat today," said Shawn McCambridge, veteran analyst with Prudential in Chicago.

 

The key "outside markets" have turned to a bullish posture for wheat and the grains today, as the U.S. dollar has weakened, crude oil has turned higher and the U.S. stock indexes have also turned up in early electronic trading.

 

Scouts on the annual Wheat Quality Council HRW tour found an average yield of 43 bushels per acre in central and northern Kansas versus 45.4 an acre from similar routes last year. This suggests an "average" Kansas wheat yield. Day one samples uncovered very little disease pressure or damage to the crop. "The tour is finding no problems," said McCambridge. Day two of the tour will take scouts through western and southern Kansas.

 

In overnight demand news, it was reported that Jordan has tendered for 100,000 Metric Tonnes of optional origin wheat.

 

Weather in the northern U.S. plains spring wheat regions has been mostly dry with a few scattered light showers the past 24 hours. The forecast calls for continued dry weather the next 48 hours. This will allow some planting of the HRS wheat crop.

 

In the southern U.S. plains hard red winter regions, it was mostly dry the past 24 hours with a few scattered showers. Showers and scattered thunderstorms are forecast for the region the next 48 hours.

 

The main wheat belt in Australia still needs rain, with no precipitation in the near-term forecast, said ag officials for the state of Western Australia. "Weather forecasts for May suggest no significant rain over agricultural areas until after mid-month, implying an average-to-late start to the growing season. Over the past five years, Western Australia has accounted for more than 40% of Australia's annual wheat production.

 

Technically, wheat bears still have the overall near-term technical advantage. The next downside price objective for the bears is pushing and closing prices below solid technical support at the March low of US$5.10 3/4. The bulls' next upside price objective is to push and close July futures prices above solid technical resistance at the April high of US$5.65 a bushel. First resistance is seen at Tuesday's high of US$5.63 and then at this week's high of US$5.71 1/4. First support lies at this week's low of US$5.46 1/2 and then at US$5.40.