August 10, 2009

 

US Wheat Outlook on Monday: Seen down 1-3 cents as crop report positioning seen

 

 

U.S. wheat futures are poised to start weaker Monday amid a lack of strong influences from other markets.

 

Chicago Board of Trade September wheat is called to open down 1 to 3 cents per bushel. In overnight electronic trading, CBOT September wheat lost 1/2 cent to US$4.89, while CBOT December wheat slipped 1/4 cent to US$5.16 1/2.

 

Some positioning is expected ahead of crop reports due out from the U.S. Department of Agriculture at 8:30 a.m. EDT Wednesday, traders said. The USDA is slated to issue fresh estimates on U.S. crop production and on global supply and demand.

 

The reports are seen as more important for soybeans and corn than for wheat, but adjustments to estimates for the summer row crops could help influence wheat, said Tom Leffler, owner of Leffler Commodities. CBOT soybeans and corn were near unchanged overnight.

 

"Expect to see positioning before Wednesday's reports in all these grains," Leffler said.

 

There is a lack of fresh fundamental news for wheat, traders said. Demand remains lackluster amid competition from other exporters, such as the E.U. and Russia, they said.

 

"There's nothing going on here right now," Leffler said. "We have not seen improved demand. We have not seen anything to get us excited."

 

Dryness remains a concern in Argentina, where conditions of the young wheat crop vary widely. The lack of rain is affecting western regions, with cool temperatures slowing development of the late wheat, while soil moisture has improved in the Bragado district of Buenos Aires province, according to Argentina's Agriculture Secretariat.

 

No significant rainfall is expected during the next seven days in Argentina, according the private weather firm DTN Meteorlogix.

 

In the U.S., hotter, drier weather early this week in the northern Plains favors maturing wheat and the early harvest, Meteorlogix said. However, wetter weather and cooler temperatures may return late in the week, the firm said.

 

Non-commercial speculative funds slightly expanded their net short position in CBOT wheat futures and options to 50,378 contracts as of Aug. 4, up from 49,838 contracts as of July 28, according to supplemental Commodity Futures Trading Commission reports.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below major psychological support at US$5.00, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.85, he said.

 

First resistance is seen at Friday's high of US$5.32 1/4 and then at US$5.40. First support lies at Friday's low of US$5.15 1/2 and then at US$5.00, the analyst said.