December 9, 2009

 

US Wheat Outlook on Wednesday: Steady-up 2 cents on corn; market "overdone"

 

 

U.S. wheat futures are expected to open steady to slightly higher Wednesday as bulls try to halt a week-long losing streak with the support of corn.

 

Chicago Board of Trade wheat is called steady to 2 cents higher. In overnight trade, December wheat was down 4 1/4 cents to US$5.15 per bushel and March wheat was down 1/4 cent to US$5.39 1/2.

 

The market has slid for six consecutive days amid weak fundamentals and bearish technical momentum.

 

"It might be overdone short-term," a trader said of the slump. "But that doesn't mean we can't go lower still."

 

The market is weighted by poor demand and has a lack of bullish news to bring it out of its slump. But corn, which was slightly higher Tuesday, is poised to open higher again Wednesday, which could underpin wheat, a trader said.

 

A snowstorm accompanied by high winds is supporting corn, and the weather for wheat is also a little supportive, an analyst said.

 

"Futures could get a little support this morning from a forecast for sub-zero temperatures on the Plains tomorrow morning," Farm Futures senior editor Bryce Knorr said in a morning commentary. "Some areas without snow cover in southwest Kansas could be at risk."

 

Elsewhere, the snow is good for the crop as it protects it from the harsh weather, analysts said.

 

Besides corn, outside macro markets, including a weaker dollar and stronger equities, are also pointing the way higher, a trader said.

 

Analysts say that fund money, which had driven strength in the market recently despite what were seen as bearish fundamentals, has dried up.

 

March Chicago wheat closed lower Tuesday, near the session low, and hit another fresh four-week low, a technical analyst said.

 

The next downside price objective for the bears is pushing and closing March prices below solid technical support at the November low of US$5.07 1/2, the technical analyst said. Bulls' next upside price objective is to push and close March futures prices above solid technical resistance at US$5.80 a bushel.

 

First resistance is seen at US$5.50 and then at Tuesday's high of US$5.54 1/4. First support lies at Tuesday's low of US$5.37 1/4 and then at US$5.30.