December 16, 2008
US Wheat Outlook on Tuesday: Higher as supportive factors undergird
U.S. wheat futures are expected to add modest gains when Tuesday's day session opens on perceived fundamental strength and supportive outside markets.
Chicago Board of Trade December wheat is called to open 2 to 3 cents per bushel higher. In overnight electronic trading, CBOT December wheat added 1 1/2 cents to US$5.21 1/2.
After crude oil was up US$3, then closed at a loss Monday, "the fact that grains didn't crash and burn was encouraging for the bulls," said market analyst Vic Lespinasse of grainanalyst.com.
Grains demonstrated "independent strength yesterday," he said, giving him faith in "technical bullishness."
Expectations that a crude oil production cut will result from OPEC's meeting in Algiers Wednesday is supporting crude oil futures, traders say. Crude oil's performance often leads the agricultural commodities.
As CBOT March wheat closed firmer but near Monday's session low, the "bears still have the overall near-term technical advantage," a market technician said, noting "prices are still in a nine-month-old downtrend on the daily bar chart."
The next objective for the bears is to push and close "below solid technical support at US$4.71, " he said, marking first support at Monday's low of US$5.16, then US$5.
As the wheat bulls move to penetrate solid technical resistance at the US$5.50 barrier, first resistance lies at Monday's high of US$5.34 1/4, the technician said.
Mostly dry conditions are speeding the harvest of Argentina's drought-stressed crop, DTN Meteorlogix said.
But "wet conditions across Australia wheat areas is unfavorable for maturing wheat and will likely delay the wheat harvest," the private weather forecasting firm said.
In global trading news, "Saudi Arabia added its name to a long list of big tenders working out of the Middle East, Southwest Asia and North Africa," said Bryce Knorr, Farm Futures senior editor in his morning outlook. "Drought hurt production in the region, and many of those tenders are due Wednesday."
"Pacific Rim buying from the U.S. remains slow, though Taiwan did pick up 2 million bushels today, Knorr noted. "Weekly export inspections totaled 12.3 million bushels, below the low end of trade guesses."
Also, the state-run Grain Board of Iraq is tendering to purchase 50,000 metric tonnes of milling wheat from any origin, European traders said Tuesday.
Japan issued a tender for 62,000 metric tonnes of wheat, including 41,000 tonnes of U.S. white and hard red spring wheat.