October 15, 2007

 

US Wheat Outlook on Monday: Steady-firmer on overnight, outside markets

 

 

U.S. wheat futures are expected to start Monday's day session steady to 3 cents firmer per bushel on follow-through buying from the overnight and stronger outside markets, traders said.

 

In e-cbot overnight trading, Chicago Board of Trade December wheat jumped 1 3/4 cents to US$8.59 1/4.

 

Firmer outside markets and a weakened U.S. dollar are seen as supportive for the wheat markets, traders said. The weaker greenback is friendly for the grains because it gives foreign importers more buying power, they said.

 

There was not much fresh news out during the weekend, and the trade is waiting to see fresh export demand, analysts said. Export sales will set the tone for the markets moving forward, they said.

 

The U.S. Department of Agriculture is set to release weekly export inspections data at 11 a.m. EDT.

 

There remain some concerns about crop losses in Australia due to drought, although some traders said the markets have already factored in the situation Down Under. Australia's wheat belt looks to be drier and sometimes hotter during the next seven days, continuing to stress the crop, DTN Meteorlogix said.

 

The northern and eastern parts of Western Australia's wheat belt, the west of South Australia, parts of central and eastern Victoria, most of New South Wales and parts of southern Queensland "are all indicating forecasts of well below average yields," according to an Australian climate and agricultural update issued Monday.

 

The southwest of Western Australia and north Queensland could have average to above average yields, according to the update issued by Australia's Bureau of Rural Sciences. All areas need further rains to meet even those expectations, it said

 

"The crop is withering," a CBOT floor trader said.

 

In Argentina, shower activity should maintain soil moisture for winter wheat, Meteorlogix said. According to the Buenos Aires Cereals Exchange, 72% of the wheat crop is in good or very good condition, down from 73% last week. About 21% is in average condition, 6% is in poor condition and 1% is in very poor condition.

 

Ukraine and southern Russia also received rain, which was needed to replenish soil moisture after this year's drought, Meteorlogix said.

 

Weekend thunderstorm activity in the U.S. central and southern Plains favored the north and east growing areas. However, rain is still needed in the southwest belt for favorable development of winter wheat, Meteorlogix said.

 

The bulls' next upside price objective is to push and close CBOT December wheat above resistance at last week's high of US$8.83, a technical analyst said. The next downside price objective for the bears is pushing prices below solid support at last week's low of US$8.41.

 

First resistance is seen at US$8.70 and then at US$8.83. First support lies at Friday's low of US$8.53 and then at US$8.41.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is pushing December wheat above resistance at US$8.94, which is the top of last week's downside price gap on the daily bar chart. The bears' next downside objective is pushing prices below solid support at last week's low of US$8.41 3/4.

 

First resistance is seen at Friday's high of US$8.76 and then at last week's high of US$8.86 1/4. First support is seen at Friday's low of US$8.61 1/2 and then at US$8.50.

 

In China, wheat prices were mostly stable in the week to Monday, as less supply helped to offset the pressure of dwindling demand. Wheat prices in Henan province, the major producing region, were between RMB1,460 and RMB1,740 a metric tonne, stable from a week earlier.