November 23, 2009

US Wheat Outlook on Monday: Up 9-12 cents as gold rises, dollar weakens

Wheat futures on the Chicago Board of Trade are expected to open 9-12 cents higher Monday as weakness in the U.S. dollar and rising gold prices spur buying across the grain markets.

In electronic trading, December wheat was 11 1/2 cents to US$5.71 1/4 a bushel, and January futures were up 11 3/4 cents at US$5.92 1/2.

As was the case last week, wheat traders are taking a cue from outside markets. Gold futures reached a record of almost US$1,168 an ounce overnight and crude oil also gained, spurring speculative buying in grains, traders said.

December wheat jumped 20 3/4 cents last week, and with trading this week expected to be thinned out before the Thanksgiving holiday, outside markets may push prices higher.

For now, outside markets are overshadowing bearish fundamentals in wheat, said Bill Tierney, an analyst with Doane Advisory Services in St. Louis.

"It's very hard from a fundamental standpoint to justify higher wheat prices at this time," Tierney said. "At some point, fundamentals are going to reassert themselves."

U.S. wheat export sales commitments are the lowest on record and the pace of exports so far this marketing year is running behind government forecasts, Tierney said.