November 4, 2009

 

US Wheat Outlook on Wednesday: Seen higher, taking cue from overnight

 

 

U.S. wheat futures are expected to start higher Wednesday on follow-through buying from the overnight trading session and speculative money flowing into the markets, traders said.

 

Chicago Board of Trade December wheat is called to open up 7 to 9 cents per bushel. In overnight electronic trading, CBOT December wheat climbed 10 1/4 cents at US$5.26.

 

Weakness in the U.S. dollar and gains in crude oil and precious metals are setting a supportive tone for the grains, traders said. CBOT corn and soybeans were higher overnight and could lend spillover strength to wheat, they said.

 

It seems as though "funds are back" and that their buying has helped support grains this week, a CBOT floor trader said. However, fund buying interest "could begin to slow" as Wednesday is "day three of expected fund demand and normally, funds buy or sell in three day increments," according to a note from Midwest Market Solutions.

 

Recent price action has been "quite satisfactory... from a bull perspective as US$5.03 1/4 was defended" in CBOT December wheat, FuturesTechs said in a market comment. The contract's low Tuesday was US$5.04 3/4 and it closed at US$5.15 3/4.

 

"The latest overnight session has seen us strong so that we might have a gap higher in primary session terms," FuturesTechs said. Upside targets are seen at 5.36 3/4 and then at 5.74 3/4, 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. 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 Tuesday's high of US$5.20 3/4 and then at US$5.25, the technical analyst said. First support lies at Tuesday's low of US$5.04 3/4 and then at US$5.00.

 

There is a lack of fresh fundamental news out for wheat. Traders still view world supply levels as comfortable and the pace of export demand as lackluster.

 

CBOT corn and soybeans continue to watch the U.S. harvest, which has been slowed by wet weather. Combining should accelerate through the weekend due to warmer and sunnier weather, according to an early forecast from T-Storm Weather.

 

The delayed soybean harvest has prevented producers from planting soft red winter wheat in parts of the Midwest and South. They seed SRW wheat after soybeans and can't put it in the ground until soybeans come out.

 

Traders are waiting to see private corn and soybean production and yield estimates expected Wednesday from Informa Economics and FC Stone. Informa usually issues its estimates about 11:30 a.m., EST, and FC Stone usually releases its estimates after 4 p.m., EST.

 

Hard red winter wheat areas of the U.S. central and southern Plains have "favorable soil moisture," according to private weather firm DTN Meteorlogix. A turn to warmer, drier weather during the next five to six days will favor the remaining planting and pre-winter crop development, the firm said.