June 23, 2009

 

US Wheat Outlook on Tuesday: Seen up 3-5 cents in rebound; harvest weighs

 

 

U.S. wheat futures are poised to start firmer Tuesday in a rebound from losses Monday, although the advancing U.S. harvest should keep a lid on gains, analysts said.

 

Chicago Board of Trade September wheat is called to open 3 to 5 cents per bushel higher. In overnight electronic trading, CBOT September wheat rose 3 3/4 cents to US$5.78 3/4, while CBOT December wheat was up 3 1/4 cents at US$6.04 3/4.

 

Wheat should "rebound in line with other markets" after a slump Monday, according to a note from Country Hedging. Neighboring CBOT corn and soybeans rose overnight and are called to start higher. Strength in crude oil and weakness in the U.S. dollar add support to the grains, a CBOT floor analyst said.

 

However, wheat could struggle to rally amid expectations that producers will make progress cutting wheat this week, an analyst said. Harvest should accelerate in the Plains once soils dry from weekend rains, according to Country Hedging.

 

The winter wheat harvest was 20% complete as of Sunday, down from 22% last year and the average of 31%, according to the U.S. Department of Agriculture. In Kansas, the top wheat-growing state, 5% of the crop was cut, down from the average of 31%.

 

The delayed harvest is not too worrisome because world wheat supplies are considered to be comfortable, one analyst said. However, there are worries the crop will lose quality the longer it sits in the field, another analyst said.

 

The USDA raised its good-to-excellent rating for spring wheat to 77% from 75% last week. The crop "mostly benefits" from warmer temperatures and continued scattered showers in the northern Plains during the next 10 days, private weather firm DTN Meteorlogix said in a forecast.

 

North of the border, Statistics Canada reduced its estimate for 2009 all-wheat plantings to 24.9 million acres from its April estimate of 25.2 million, which was within trade expectations of 23.5 million to 25.2 million. Spring wheat plantings were estimated at 17.5 million, up from the April estimate of 17.3 million.

 

Export news remains light, with Japan saying it won't hold its weekly wheat tender this week. A Japanese official declined to give a reason for the cancellation but said the tender will likely be held next Tuesday.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$5.75, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.40, he said.

 

First resistance is seen at Monday's high of US$6.11 1/4 and then at US$6.25. First support lies at Monday's low of US$5.97 3/4 and then at US$5.85.