June 30, 2009

 

US Wheat Outlook on Tuesday: Seen down 5-10 cents on acreage, weak corn

 

 

U.S. wheat futures are called to open lower Tuesday on bearish acreage forecasts from the U.S. Department of Agriculture and spillover pressure from corn, traders said.

 

Chicago Board of Trade September wheat is called to open 5 to 10 cents per bushel lower. In overnight electronic trading, CBOT September wheat was up 4 cents at US$5.61 3/4, and CBOT December wheat was up 3 3/4 cents at US$5.86 3/4.

 

The USDA's June acreage report was considered bearish for wheat because planted acres topped analysts' expectations, traders said. All-wheat plantings were pegged at 59.775 million acres, compared to the average of analysts' pre-report estimates of 58.337 million and the USDA's March estimate of 58.638 million. The highest estimate in the pre-report Dow Jones Newswires survey of analysts was 58.8 million.

 

The USDA estimated producers planted more spring wheat acres than expected in March, which was surprising as traders thought cool, wet weather had caused at least some acres to go unplanted. Spring wheat acres were seen at 13.772 million, compared to the average of analysts' pre-report estimates of 13.102 million and the USDA's March estimate of 13.304 million.

 

The acreage report is considered even more bearish for CBOT corn, as the USDA raised its forecast for plantings to 87.035 million from its March estimate of 84.986 million. The average of analysts' pre-report estimates for corn was 84.986 million.

 

Sharp losses in corn will likely weigh on wheat, traders said. The ongoing U.S. winter wheat harvest and weak export demand also are seen as fundamentally bearish for the wheat markets.

 

"After an extremely hot and mostly dry weekend, wheat harvest is in full swing in most areas throughout" Kansas, the country's top hard red winter wheat-growing state, producers' group Kansas Wheat said.

 

Generally good harvest weather is expected for the coming week, an analyst said. However, scattered thunderstorms later this week will likely delay cutting, especially over Kansas, Nebraska and Colorado, according to private weather firm DTN Meteorlogix.

Winter wheat cutting was 40% complete as of Sunday, compared with 36% last year and the average of 46%, according to the USDA. Harvest in Kansas was 47% complete, compared to the average of 61%.

 

The USDA rated 45% of winter wheat as good-to-excellent, unchanged from last week. It said 76% of U.S. spring wheat is in good-to-excellent shape, down one percentage point from last week. Spring wheat in the northern Plains should see "generally favorable weather conditions," according to Meteorlogix.

 

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. 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 Monday's high of US$5.92 1/2 and then at US$6.00. First support lies at Monday's low of US$5.79 1/2 and then at US$5.75.