December 1, 2009

US Wheat Outlook on Tuesday: Seen starting mixed, following overnight

U.S. wheat futures are poised to start mixed Tuesday, with prices expected to be effected by the flow of fund money and activity in neighboring and outside markets, analysts said.

In overnight electronic trading, Chicago Board of Trade March wheat slipped 1/4 cent to US$5.88 1/2 a bushel.

Weakness in the U.S. dollar and strength in neighboring CBOT soybeans should help support wheat, traders said. Soybeans are called to open 7 to 10 cents higher after climbing overnight.

Gains in wheat would extend Monday's rally, in which CBOT March wheat rose 19 cents amid fund and technical buying. The contract Monday closed at its highest price in nearly two weeks.

Bulls have regained some fresh upside technical momentum following recent strength, a technical analyst said. Prices are in a two-month uptrend on the daily bar chart, he said.

The next downside price objective for the bears is pushing and closing March wheat below solid technical support at last week's low of US$5.52, the technical analyst said. The next upside price objective for the bulls is to push and close the contract above solid technical resistance at the November high of US$6.04 3/4, he said.

First resistance is seen at Monday's high of US$5.90 and then at the October high of US$5.93. First support lies at US$5.80 and then at US$5.70, the technical analyst said.

In fundamental news, the U.S. Department of Agriculture said U.S. winter wheat was 89% emerged as of Sunday, up from 84% a week earlier and below the average of 93%. The crop was 96% seeded as of Sunday, reflecting that producers are wrapping up the planting season, an analyst said.

There is some chatter that a strike of Canadian National Railway engineers could hurt U.S. export sales if it persists for too long, a CBOT floor analyst said. It could "swing a few sales off the" Pacific Northwest if it continues, according to a note from Farm Futures.

In other export news, Japan said it is seeking 145,000 tons of wheat, including 105,000 tons from the U.S., in a routine tender to be concluded Thursday. Two shipments from the U.S.--one with 11,000 tons of western white wheat and 14,000 tons of semi-hard wheat, and another with 20,000 tons of western white--are expected for loading in January, while the rest is for loading from Jan. 16 to Feb. 16, according to an official.

Deliveries against the CBOT December wheat futures contract remained heavy, traders said. There were 4,505 contracts posted for delivery.