May 12, 2008

 

US Wheat Outlook on Monday: Seen steady-down on lack of bullish news

 

 

U.S. wheat futures are expected to start Monday's day session steady to lower as expectations for record world wheat production continue to pressure the markets, traders said.

 

In overnight electronic trading, Chicago Board of Trade July wheat slipped 1/2 cent to US$8.04 per bushel.

 

There is not much bullish news out for wheat, and bearish sentiments from Friday's U.S. Department of Agriculture crop reports should continue to weigh on prices, a trader said. The USDA predicted 2008-09 world wheat production would increase 8% from 2007-08 as growers expanded plantings due to high prices.

 

Crop prospects continue to look mostly favorable around the world, traders said. Frost and freeze conditions in the U.S. western Plains over the weekend were not damaging, as crop development is behind normal due to the cool spring, DTN Meteorlogix said.

In the U.S. northern Plains, episodes of rain and snow continue to build soil moisture to support emergence and growth of the spring wheat crop, Meteorlogix said. Planting progress is ahead of normal in all spring wheat states, except Minnesota, the private weather firm said.

 

"Cold weather slows crop emergence and development and may force some replanting due to freeze damage of the emerged crop," Meteorlogix said.

 

The wheat markets could find some underlying support from strength in CBOT corn and soybeans, a CBOT floor trader said. There also is some scattered demand news.

 

The state-run Grain Board of Iraq issued a new tender to buy at least 50,000 metric tonnes of hard wheat, the board said on its Web site. Pakistan's federal government, meanwhile, will import 1 million metric tonnes of wheat, in addition to an earlier allotment, to relieve a local shortage, according to an official statement.

 

The bulls' next upside price objective is to push and close CBOT July wheat above solid technical resistance at last week's high of US$8.44, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below strong technical support at the May low of US$7.77, he said.

 

First resistance is seen at Friday's high of US$8.28 and then at US$8.44. First support lies at Friday's low of US$9.91 and then at US$7.77.

 

In China, wheat prices in China's major producing regions were mostly stable in the week to Monday as government auctions helped to keep supply ample.

 

A severe earthquake Monday rocked China's Sichuan province, which T-Storm Weather said accounts for about 7% of the country's spring wheat and winter wheat production. It is unclear what affect the earthquake will have on agricultural production, the private weather firm said.