August 24, 2009

 

US Wheat Outlook on Monday: Seen slightly higher on strong soybeans

 

 

U.S. wheat futures are expected to start higher Monday on spillover strength from soybeans but could trade both sides amid a lack of demand news, analysts said.

 

Chicago Board of Trade December wheat is called to open 1 cent to 2 cents per bushel higher. In overnight electronic trading, CBOT December wheat rose 1 3/4 cents to US$4.89.

 

Wheat should follow CBOT soybeans higher "because the beans were up so strong" overnight, a broker said. November soybeans overnight were up 17 cents at US$9.90.

 

Wheat may struggle to hold on to gains as there continues to be an absence of export news, an analyst said. That could inspire some "back and forth-type trading," he said.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.50, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the July low of US$5.32 3/4, he said.

 

First resistance is seen at US$5.00 and then at last week's high of US$5.08 3/4, the technical analyst said. First support lies at the contract low of US$4.85 1/2 and then at US$4.75, he said.

 

"We are oversold on the charts, but we don't have any developing export-type news to help us out," an analyst said.

 

Outside markets seem to be providing "mixed signals" to the grains, the broker said. Crude oil is firmer, which is seen as supportive, while the U.S. dollar is slightly higher, which is seen as bearish because it makes U.S. grain less attractive to foreign buyers.

 

Looking at the weather, thunderstorms in the northern U.S. Plains may cause further delays to the spring wheat harvest in some areas, according to DTN Meteorlogix. Warmer weather this week will favor any late maturing summer crops, especially in eastern areas, at least until cooler conditions arrive late in the week, the private weather firm said.

 

In Australia, wheat from northern New South Wales to Queensland is jointing and needs rain to maintain current yield prospects, Meteorlogix said. The need for moisture" is even more critical for wheat in the north part of this area as it approaches reproduction," the firm said.

 

"I see no significant rain for the area during the next 7 days, although a few light showers may develop at the end of the week," said Joel Burgio, meteorologist for weather firm.

 

In Argentina, drought continues to impact wheat, especially in the major western growing areas. The region should see only a few light Monday and then remain mostly dry from Tuesday through Sunday, according to Meteorlogix.