May 19, 2009

 

US Wheat Outlook on Tuesday: Seen extending gains on outside markets

 

 

Supportive signals from outside markets and fund buying are expected to lift U.S. wheat futures at the start of Tuesday's day session.

 

Chicago Board of Trade July wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT July wheat rose 3 1/2 cents to US$5.94.

 

Gains in crude oil, equities and CBOT soybeans and weakness in the U.S. dollar are seen as supportive for wheat, traders said. A soft dollar makes U.S. wheat more attractive to foreign buyers.

 

Soybeans remain the leader on the agricultural floor due to worries about tightening old-crop supplies, according to a note from MF Global. The grains are "influenced more by outside market behavior than [the] bean market, which is coping with higher than expected exports and domestic crush," the firm said.

 

Wheat, corn and soybeans were firmer overnight after closing higher Monday. Wheat bulls and bears are on a "level near-term technical playing field" after Monday's gains, a technical analyst said.

 

The next downside price objective for the bears is pushing and closing CBOT July wheat below solid technical support at US$5.48, the analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.35, he said.

 

First resistance is seen at US$6.02 1/4 and then at US$6.15. First support lies at US$5.80 and then at US$5.75, the analyst said.

 

FuturesTechs sounds more bullish on wheat. Above last week's electronic high of US$6.02 1/4 in CBOT July wheat, the market is aiming for US$6.11 and then US$6.46 1/4, the firm said in a note.

 

"The bulls are in charge, and weakness is a buying opportunity," FuturesTechs said.

 

The markets continue to watch spring wheat planting progress in the northern U.S. Plains after delays due to cool, wet weather. Producers should advance planting this week due to warmer, drier weather, which could weigh on prices, an analyst said.

 

However, cold soil temperatures and saturated soils in eastern areas will keep planting progress well behind normal in North Dakota, northwest Minnesota and the eastern Prairies, private weather firm DTN Meteorlogix said. Some acreage will likely shift to soybeans from spring wheat, it said.

 

Spring wheat seeding was 50% complete as of Sunday, down from 92% last year and the average of 90%, according to the U.S. Department of Agriculture. That was in line with trade expectations.

 

In Australia, winter crop lands in the east and southwest will receive useful planting rains in coming days, according to weather forecasts.

 

In other news, Japan is seeking 107,000 tonnes of wheat, including 65,000 tonnes of U.S. wheat, in a routine tender to be concluded Thursday.