June 24, 2008

 

US Wheat Outlook on Tuesday: Mixed, watching harvest and other markets

 

 

U.S. wheat futures are called to start Tuesday's day session mixed, with traders focusing on harvest progress and activity in neighboring markets.

 

Chicago Board of Trade September wheat ended the overnight electronic trading session unchanged at US$8.84 1/4 per bushel. CBOT December wheat slipped 1 cent to US$9.07.

 

Seasonal harvest pressure could continue to weigh on wheat, as producers push to get their fields cut in the U.S. Plains. However, there are still concerns about delays due to wet weather and the potential for crop damage from rains, an analyst said.

 

Tuesday's long-range weather charts raise the odds for further thunderstorms in the central and southern Plains, DTN Meteorlogix said. Rain slowed harvest last week, although some producers were able to cut their fields during the weekend, according to Kansas Wheat, a producers' group.

 

The U.S. Department of Agriculture on Monday reported 22% of the winter wheat crop had been harvested, compared with 16% the previous week and the five-year average of 32%. Traders had expected cutting to be 27% to 29% complete.

 

"Persistent wet weather continues to hinder wheat harvest progress throughout the state," Kansas Wheat said in a report. "In multiple locations, harvest began in earnest last week, only to be stopped again."

 

Gains in CBOT corn and soybeans could lend spillover support to wheat. The row crops were firmer overnight on gains in crude oil.

 

In other news, Statistics Canada's estimate that 2008 all-wheat plantings will total 25.099 million acres is neutral for CBOT wheat futures, a floor trader said. The estimate shouldn't impact the market as it is basically unchanged from Statistics Canada's March forecast of 25.109 million, he said.

 

Analysts had said they were expecting an acreage estimate of 24.35 million to 24.6 million. In 2007, seedings were 21.617 million.

 

Looking at technical charts, bulls have faded a bit recently, a market technician said. That has returned bulls and bears to a level near-term technical playing field, he said.

 

The bulls' next upside price objective is to push and close CBOT December wheat above solid technical resistance at the June high of US$9.54, he said. The next downside price objective for the bears is pushing and closing the contract below solid technical support at Monday's low of US$8.83 1/2, he said.