May 18, 2009

 

US Wheat Outlook on Monday: Seen 4-6 cents lower on weather, spillover

 

 

Improvement in the weather outlook and pressure from other markets are expected to weigh on U.S. wheat futures at the start of Monday's day session.

 

Chicago Board of Trade July wheat is called to open 4 to 6 cents per bushel lower. In overnight electronic trading, CBOT July wheat shed 6 1/4 cents to US$5.71 1/4.

 

Weather in the northern U.S. Plains turned drier this weekend and will be "much warmer" Monday and Wednesday, according to a forecast from WSI AgTrader. That could help advance spring wheat planting, which has been seriously delayed by cool, wet weather, traders said.

 

Planting in North Dakota, the top spring wheat-growing state, could be 25% complete in the U.S. Department of Agriculture's weekly crop progress report, due out at 4 p.m. EDT, according to a note from Country Hedging. Seeding was 13% complete a week ago, down from the average of 74%.

 

Minneapolis Grain Exchange spring wheat futures, in particular, could feel pressure from expectations for warmer, drier weather, an analyst said. Still, there are concerns saturated soils and slow planting will cause some farmers to shift acres to other crops, such as soybeans, from spring wheat.

 

In the central and southern U.S. Plains, weather for developing hard red winter wheat should be favorable, "with mostly adequate soil moisture in the major growing areas," private weather firm DTN Meteorlogix said. Drier weather during the next six to 10 days will ease concerns over disease development, the firm said in a forecast.

 

There is a lack of other fundamental news that would have an impact on wheat markets, traders said. Weakness expected in CBOT corn and soybeans should add pressure to wheat, a CBOT floor trader said.

 

The next downside price objective for the bears is pushing and closing CBOT July wheat below solid technical support at US$5.48, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.02 1/4, he said.

 

First resistance is seen at the April high of US$5.84 1/2 and then at Friday's high of US$5.95 1/4. First support lies at Friday's low of US$5.75 1/4 and then at US$5.65.

 

In other news, a second shipment of Russian wheat was quarantined at a port in Egypt, a spokesperson for the ship's agency said. The ship was carrying around 55,000 tonnes of Russian wheat, the spokesperson said.

 

It was unclear why or for how long the wheat was being quarantined, but it followed a quarantine of 52,501 tonnes of Russian wheat last week on concerns it was not fit for human consumption. The quarantines look like "isolated incidents" for now and should not have a major impact on U.S. wheat, a trader said.