July 13, 2009

 

US Wheat Outlook on Monday: Mixed; speculative funds are 'heavily short'

 

 

U.S. wheat futures are expected to start mixed Monday on a lack of fresh news but could find some support from short-covering, traders said.

 

In overnight electronic trading, Chicago Board of Trade September wheat slipped 1/4 cent to US$5.18 1/2 a bushel. CBOT December wheat rose 1/4 cent to US$5.45 1/2.

 

Short-covering could give the markets a boost as speculative funds are "heavily short" in CBOT wheat, a trader said. The funds expanded their net short position to 50,363 contracts as of July 7 from 36,627 contracts as of June 30, according to supplemental reports from the Commodity Futures Trading Commission.

 

Outside markets aren't providing much direction, while neighboring CBOT corn and soybeans were weaker overnight. Weather looks non-threatening for corn and soybeans in the central U.S.

 

Thunderstorms over Colorado and Nebraska could slow hard red winter wheat cutting during the next five to seven days, according to private weather firm DTN Meteorlogix. The delays will not be a big deal, and the wheat will eventually get cut, a trader said.

 

In the northern U.S. Plains, a strong short wave trough will bring back thunderstorms back early this week, Meteorlogix said. Spring wheat will benefit from the added moisture and the recent trend toward warmer temperatures, the firm said.

 

Dryness remains a concern in Argentina, but long-range charts suggest some rain may fall during the weekend, according to Meteorlogix. Cooler weather and a few showers will help ease stress to wheat in Russia and Kazakhstan during the next five to seven days, but more rain is still needed in the west, the firm said.

 

Widespread rainfall in June on Australia's farm lands boosted the outlook for wheat production this crop year, Rabobank Australia said in a report. The bank held its output forecast unchanged at 22.8 million tonnes, near the U.S. Department of Agriculture's estimate of 23 million.

 

Export demand for U.S. wheat remains lackluster as the winter wheat harvest wraps up, a CBOT floor trader said. The USDA will issue an update on harvest at 4 p.m. EDT in its weekly crop progress report.

 

The next downside price objective for bears is pushing and closing CBOT December wheat below solid technical support at US$5.25, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.80, he said.

 

First resistance is seen at US$5.50 and then at last week's high of US$5.57 3/4. First support lies at last week's low of US$5.38 and then at US$5.30.