November 2, 2009

 

US Wheat Outlook on Monday: Seen mixed; outside markets look supportive

 

 

U.S. wheat futures are expected to open mixed Monday as traders keep an eye on outside influences and wait to see whether money flows into the markets at the start of the month.

 

In overnight electronic trading, Chicago Board of Trade December wheat slipped 1 cent to US$4.93 1/4 per bushel.

 

Weakness in the U.S. dollar and strength in crude oil and precious metals are seen as supportive for the grains, traders said. The neighboring CBOT corn and soybean markets were higher overnight.

 

There was a lack of fresh fundamental news out for wheat during the weekend, traders said. Weather in the U.S. Midwest for the upcoming week looks drier, which should allow producers to advance the corn and soybean harvests and to plant more soft red winter wheat, they said.

 

"Drier and increasingly warmer weather will help improve conditions for the harvest of summer crops and the planting of winter wheat for at least the next 7 or 8 days," DTN Meteorlogix said in a forecast. "After that, there may be some increase in rain chances."

 

SRW wheat plantings have been delayed by the slow soybean harvest because many producers in the Midwest and south seed SRW wheat after soybeans. Wet weather has slowed the corn and soy harvests.

 

The U.S. Department of Agriculture is slated to issue updates on harvest and seeding in its weekly crop progress report, due out at 4 p.m. EST. The USDA said that 76% of winter wheat was planted as of Oct. 25, below the five-year average of 85%.

 

The USDA is scheduled to issue its weekly export inspections report at 11 a.m. EST. The U.S. continues to face stiff competition for export business due to large global supplies of wheat, a trader said.

 

Looking at technical charts, "bears are doing absolutely fine" after recent losses, according to a note from FuturesTechs. Key upside resistance at US$5.14 1/4 is "protected" by resistance at US$5.04 1/4 and US$5.11 1/4, the firm said.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.80, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.29, he said.

 

First resistance is seen at US$5.00 and then at Friday's high of US$5.09 1/4, the analyst said. First support lies at Friday's low of US$4.88 and then at US$4.80.