June 8, 2009
US Wheat Outlook on Monday: Seen down on firm dollar, lack of news
Strength in the U.S. dollar and a lack of fresh supportive news 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 7 to 10 cents per bushel lower. In overnight electronic trading, CBOT July wheat fell 12 cents to US$6.11.
The markets should keep an eye on the dollar after a firm greenback pressured grains and soybeans overnight, traders said. A rise in the dollar Friday helped generate broad-based weakness in agricultural commodities, an analyst said.
Traders are starting to look ahead to U.S. Department of Agriculture crop reports due out Wednesday, including new estimates on carryout and U.S. winter wheat production. No major changes are expected from the government's May estimates, according to a survey of analysts.
"Wheat prices should open lower on a stronger dollar and continue to take their cue from the dollar throughout much of today's session," Farm Futures analyst Arlan Suderman said. "A generally soft tone is expected as we head into Wednesday's USDA crop report unless the outside markets turn abruptly higher."
The next downside price objective for the bears is pushing and closing CBOT July wheat below solid technical support at US$6.00, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.77, he said.
First resistance is seen at US$6.39 1/2 and then at US$6.50. First support lies US$6.21 and then at US$6.14 1/4, the analyst said.
There is a lack of fresh fundamental news to push prices higher, a CBOT floor trader said. The markets continue to watch weather forecasts amid lingering worries about excessive wetness encouraging fungal diseases in U.S. soft red winter wheat.
In hard red winter wheat areas of the central and southern U.S. Plains, conditions should remain "favorable" for heading and filling wheat in the north, private weather firm DTN Meteorlogix said. Cool and damp weather should continue to delay development of spring wheat in the northern Plains, traders said.
Argentina, meanwhile, is "bone dry," a trader said. Rain is needed to support early growth of wheat, especially in western crop areas, according to Meteorlogix.
In export news, an official with the Grain Board of Iraq said Monday that Iraq had issued a new tender to buy at least 50,000 tonnes of hard wheat, but that news was already in the markets, a CBOT trader said. It wouldn't be surprising to see Iraq buy wheat from Canada or possibly Australia, he said.
