May 14, 2008

 

US Wheat Outlook on Wednesday: Seen down on corn weakness, lack of news

 

 

Spillover pressure and a lack of fresh supportive news are expected to keep U.S. wheat futures on the defensive at the start of Wednesday's day session, traders said.

 

Chicago Board of Trade July wheat is called to open 3 to 5 cents per bushel lower. In overnight electronic trading, CBOT July wheat slid 3 3/4 cents to US$7.92.

 

CBOT corn also stumbled overnight, and weakness in the neighboring market should weigh on wheat, traders said. Expectations for a record world wheat crop in 2008-09 continue to be fundamentally bearish for the markets amid an absence of other news, analysts said.

 

"It's really hard to get bulled up on anything in wheat," a CBOT floor broker said.

 

The U.S. winter wheat harvest has begun in some southern states, including Louisiana and Texas, and cutting should pick up speed in the next few weeks, analysts said. Weather conditions remain mostly favorable in major global production areas, they said.

 

In the U.S. central and southern Plains, showers and then warmer temperatures will favor development of hard red winter wheat during the next seven days, according to DTN Meteorlogix. In spring wheat areas of the northern Plains, drier weather favors spring field work and planting, the private weather firm said.

 

Scattered showers are possible through Australia's south-central, southeast and east-central wheat areas during the next few days, Meteorlogix said. The precipitation will help replenish soil moisture for planting wheat, but it is unclear whether the areas will see a significant rain event or just a few scattered showers, the firm said.

 

Trading is expected to be choppy in thin volume, as it was at the beginning of the week, traders said. It isn't difficult to push prices around with small orders, a CBOT floor broker said.

 

The bulls' next upside price objective is to push and close CBOT July wheat above solid technical resistance at last week's high of US$8.44, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below strong technical support at the May low of US$7.77, he said.

 

First resistance is seen at US$8.00 and then at this week's high of US$8.11. First support lies at Tuesday's low of US$7.90 and then at US$7.77.