May 8, 2007

 

US Wheat Outlook on Tuesday: 8-10c down on overnight, corn pressure

 

 

U.S. wheat futures are expected to start Tuesday's day session 8-10c lower per bushel, taking their cue from declines overnight and with losses in the neighboring corn market weighing on prices, traders said.

 

In e-cbot trading, Chicago Board of Trade July wheat slipped 10 1/2 cents to US$4.83 1/2.

 

CBOT corn tumbled overnight on news of U.S. planting progress and dragged wheat futures to the downside, traders said. Losses in corn should continue to pressure wheat during the day session, they added.

 

Ideas that the U.S. winter wheat crop is improving after a hard weekend freeze also should limit gains, an analyst said. The U.S. Department of Agriculture on Monday afternoon rated 57% of the crop in good-to-excellent condition, up one percentage point from a week earlier.

 

In Kansas, the nation's largest hard red winter wheat-producing state, 37% of the crop was rated in good-to-excellent condition, down from the 39% reported last week. In Oklahoma, 73% of the crop was rated in good-to-excellent condition, versus 70% last week.

 

In the soft red winter wheat-producing states, Illinois' crop was rated 26% in good-to-excellent condition compared with last week's 25%; Arkansas' crop was rated 16% good-to-excellent versus 15% last week; Indiana's crop was rated 37% good-to-excellent, up from last week's 34% rating; and Missouri's crop was 9% in good-to-excellent condition compared with 5% last week.

 

The drop in Kansas' good-to-excellent rating was somewhat unexpected and could lend some strength to Kansas City Board of Trade wheat futures, the analyst said. The improved overall condition, however, should keep a lid on advances, he added.

 

Sixty-eight percent of the U.S. spring wheat crop, meanwhile, had been planted as of May 6, the USDA reported. This is above the 55% planted last-year and the five-year average of 62%.

 

Looking ahead, traders have their eyes on a USDA supply/demand report slated for release Friday, analysts said. There are concerns that wheat production estimates could be lowered to reflect yield loss from an Easter weekend freeze, and that should limit selling interest, a technical analyst said.

 

The bulls' next upside price objective is to close CBOT July wheat above solid resistance at US$5.08. The next downside price objective for the bears is closing prices below solid support at last week's low of US$4.84.

 

First resistance is seen at Monday's high of US$4.98 1/2 and then at US$5.00. First support lies at US$4.90 and then at Monday's low of US$4.86.

 

At the KCBT, the bulls' next upside price objective is closing July wheat prices above solid chart resistance at US$5.00. The bears' next downside objective is closing prices below solid support at last week's low of US$4.76 1/2.

 

First resistance is seen at Monday's high of US$4.89 and then at US$4.91. First support is seen at US$4.80 and then at US$4.76 1/2.

 

In other news, Japan is seeking 140,000 metric tonnes of wheat in a routine tender to be concluded Thursday, an agriculture ministry official said Tuesday. The wheat is scheduled to arrive between June 21 and July 20.

 

In Australia, Prime Minister John Howard told a meeting of government legislators he will outline a compromise policy covering export wheat marketing arrangements in two weeks.