Chicago Board of Trade December wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT December wheat gained 4 cents to US$5.15 1/4.
CBOT wheat could continue to climb as non-commercial speculative funds still hold a large net short position in the market, an analyst said. Gains this week have pulled the December contract above major-moving averages, which is technically supportive, he said.
"This is now all about the bulls and how they have taken the initiative here," FuturesTechs said in a note. The "next stop" for CBOT December wheat is US$5.16 1/2, the firm said.
"We are gunning to get through US$5.16 1/2 today, then extending our upside targets to gap resistance at US$5.50 and the next big resistance up at US$5.57 1/2," FuturesTechs said.
The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.75, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.40, he said.
First resistance is seen at Tuesday's high of US$5.14 1/2 and then at US$5.25, the analyst said. First support lies at US$5.00 and then at Tuesday's low of US$4.86, he said.
"The bulls have fresh upside near-term technical momentum to suggest that a market low is in place," the technical analyst said.
There could be some support from a U.S. Department of Agriculture announcement that the U.S. had sold 200,000 tonnes of hard red wheat to Iraq for delivery in the 2009-10 marketing year, a trader said. The pace of U.S. export sales this marketing year has been sluggish due to competition for business from other countries.
However, wheat may be seen as technically overbought after rallying 74 cents in the past seven day sessions, according to Country Hedging.
"It's kind of suspect whether we can maintain a lot more" strength, said Tom Leffler, owner of Leffler Commodities. "There's no doubt this market was due to bounce."
In other news, the USDA said Monday that 64% of the U.S. winter wheat crop was planted as of Sunday, up from 53% last week and down slightly from the five-year average of 69%. Overall winter wheat plantings are moving along nicely, but there are worries that the late soybean harvest is delaying plantings of soft red winter wheat in the Midwest, an analyst said.
