December 1, 2008
US Wheat Outlook on Monday: 10-15 cents lower on outside market pressure
Losses in outside markets are expected to weigh on U.S. wheat futures at the start of Monday's day session amid a lack of fresh bullish news.
Chicago Board of Trade March wheat is called to open 10 to 15 cents per bushel lower. In overnight electronic trading, CBOT March wheat fell 14 1/4 cents lower at US$5.47.
Weak crude oil and equities should put pressure on wheat, as the grains continue to watch outside markets for direction, traders said. Crude oil is linked to the grains because funds often trade in a basket of commodities and because ethanol is made from corn.
A strong U.S. dollar is another bearish influence, as it gives foreign countries less buying power to import U.S. commodities. There is export business being done of the world wheat market, although it is fairly routine, a CBOT floor trader said.
CBOT corn and soybeans are expected to open lower with wheat. Rains in Argentina were seen as beneficial to the row crops and bearish for the markets after recent dryness, a CBOT floor analyst said.
Wheat traders continue to monitor wet weather in Australia as rains at harvest time are thought to be hurting the quality of the crop. Rain and thunderstorms late last week in Australia's New South Wales and Queensland "will likely mean further harvest delays and possible quality concerns for wheat," private weather firm DTN Meteorlogix said in a forecast.
In the U.S., wheat in the Midwest will likely benefit from snow and rain that fell during the weekend, Meteorlogix said. Development will slow with colder temperatures in the area, the firm said.
Periodic cold weather for wheat in the U.S. central and southern Plains does not look to be cold enough to harm wheat. However, periodic episodes of strong winds may need to be watched, Meteorlogix said.
In other news, deliveries against the CBOT December wheat futures contract were 3,593 contracts Monday. That is the second consecutive day of heavy deliveries, which indicates there are ample supplies around, a CBOT trader said.
Short-covering and concerns about Australia's crop helped prop up prices Friday, the CBOT floor analyst said. However, volume was "very light" and traders "can't take too much from what went on," FuturesTechs said in a market comment.
The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at the contract low of US$5.15 1/4, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the November high of US$6.08, he said.
First resistance is seen at Friday's high of US$5.65 1/4 and then at last week's high of US$5.78. First support lies at Friday's low of US$5.50 and then at last week's low of US$5.43 1/2.