June 29, 2009

 

US Wheat Outlook on Monday: Seen starting up; positioning expected

 

 

U.S. wheat futures are poised to start slightly higher Monday, with positioning expected before the release of crop reports on Tuesday and ahead of the end of the month, end of the quarter and first notice day for July contracts.

 

Chicago Board of Trade September wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT September wheat rose 4 cents to US$5.67, while CBOT December wheat was up 4 cents at US$5.91 1/4.

 

Position-evening will likely be a feature before the U.S. Department of Agriculture issues acreage and quarterly stocks reports at 8:30 a.m. EDT Tuesday, analysts said. The reports will be a bigger event for corn and soybeans than for wheat, but traders are interested to see estimates on spring wheat acreage, they said.

 

First notice day for July contracts is Tuesday, which means it is the first day that notices of intention to deliver actual wheat against futures-market positions can be received. Deliveries against CBOT July wheat are expected to be "heavy" as wheat supplies are comfortable and registrations are large, an analyst said.

 

Wheat is due for a bounce after sinking recently under pressure from the advancing U.S. winter wheat harvest, traders said. Weather this week looks favorable for continued cutting in the Midwest and southern Plains, they said.

 

"No major delays to the harvest are expected during the next seven to 10 days" in the central and southern Plains, according to a forecast from DTN Meteorlogix. Some disruptions are possible due to periodic thunderstorms, it said.

 

"Wheat harvest continues to progress through Kansas, with cutting occurring throughout the state, with the exception of extreme northeast Kansas," growers' group Kansas Wheat said.

 

Weather should be "generally favorable" for the developing spring wheat crop in the northern Plains, Meteorlogix said. Dryness remains a problem in Argentina, as showers during the weekend were mainly in eastern areas, the firm said.

 

Non-commercial speculative funds expanded their short position in CBOT wheat to 27,567 contracts as of June 23, the Commodity Futures Trading Commission said in a supplemental report. A week ago, they were net short 21,939 contracts.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$5.63, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.30, he said.

 

First resistance is seen at US$5.91 and then at US$6.00. First support lies at US$5.81 and then at US$5.75.