June 24, 2009

 

US Wheat Outlook on Wednesday: Seen starting 3-5 cents higher in recovery

 

 

U.S. wheat futures are expected to start firmer Wednesday in a recovery from recent slides, although there is a lack of fresh news for the markets to feed on, traders said.

 

Chicago Board of Trade September wheat is called to open 3 cents to 5 cents per bushel higher. In overnight electronic trading, CBOT September wheat added 4 3/4 cents to US$5.80 1/2, and CBOT December wheat was up 4 1/2 cents at US$6.05.

 

Wheat is in an oversold condition after tumbling since the beginning of the month, a CBOT trader said. Technical buying and positioning could offer prices some support, an analyst said.

 

Outside markets Wednesday look "subdued" and aren't offering much strong direction, a trader said. CBOT corn was basically unchanged overnight, and CBOT soybeans slipped slightly.

 

It was a "bearish clue" that wheat was unable to establish much traction Tuesday, despite support from a weaker dollar, a technical analyst said. Prices are in a steep three-week-old downtrend on the daily bar chart, he said.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$5.75, the technical analyst said. 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 Tuesday's high of US$6.08 and then at US$6.25. First support lies at Tuesday's low of US$5.96 1/4 and then at US$5.85.

 

Traders are digesting a report on speculation in wheat from the U.S. Senate's Permanent Subcommittee on Investigations. The panel conducted a yearlong investigation of the wheat market and suggested in a 247-page report that new limits are needed for index traders.

 

The ongoing U.S. wheat harvest and large world supplies should continue to hang over the markets, analysts said. A hot and dry weather pattern in the central and southern U.S. Plains this week opens the door for harvest progress, private weather firm DTN Meteorlogix said.

 

In the Canadian Prairies, increasing shower activity should help improve crop conditions in the drier western belt, Meteorlogix said. Showers during the next five days will be mainly in northern Alberta crop areas, an area that has been the driest so far this spring and summer, the firm said.

 

Dryness remains a concern for wheat in Argentina. The next chance for scattered showers comes during the weekend, but it's unlikely the event will produce significant rain in the driest areas, according to Meteorlogix.

 

Russian and Kazakh spring Wheat, meanwhile, is under increasing stress due to a recent trend toward below-normal rainfall and above-normal temperatures, Meteorlogix said. The region is expected to stay mostly dry during the next seven days.