August 11, 2008


US Wheat Outlook on Monday: Seen mixed, watching other markets



U.S. wheat futures are called to start Monday's day session mixed, with traders expected to keep an eye on other markets and even up positions ahead of the release of government crop data.


In overnight electronic trading, benchmark Chicago Board of Trade September wheat slipped 1 3/4 cents to US$7.63 1/2 per bushel. CBOT December wheat stumbled 2 1/2 cents to US$7.87 3/4.


Wheat will be watching activity in CBOT corn and soybeans, which were higher overnight, and in crude oil, which was firmer overnight, traders said. CBOT grains and soybeans are due for a bounce after a heavy sell-off Friday, they said.


CBOT December wheat Friday closed sharply lower and near the session low as the dollar rallied and crude oil sank. The bears still have the overall near-term technical advantage in wheat, and a six-week-old downtrend is in place on the daily bar chart for the CBOT December contract, a technical analyst said.


The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at last week's low of US$7.71, the analyst said. The bulls' next upside price objective is to push and close the contract above psychological resistance at US$8.00, he said.


First resistance is seen at US$8.00 and then at US$8.13. First support lies at Friday's low of US$7.87 1/4 and then at US$7.75.


"Bears are still the bosses," FuturesTechs said in a market comment.


Traders are waiting for the U.S. Department of Agriculture to issue its August crop production and supply and demand reports at 8:30 a.m. EDT Tuesday. For wheat, the reports will include updated estimates on production and ending stocks.


France raised its forecast for 2008-09 soft wheat production to 37 million tonnes, up from its June estimate of 36.6 million tonnes and up 20.2% on the year. French farmers seeded more land to grain crops due to record high prices during the autumn planting season and after the European Union abolished its 10% mandatory arable land set-aside scheme. Favorable weather then further added to total crop production.


In U.S. northern Plains spring wheat areas, rainfall early in the week will be unfavorable for maturing wheat and any harvesting, DTN Meteorlogix said. Crop areas on the Canadian prairies also should see rain early this week, the private weather firm said.


Dry conditions are on tap in Argentina during the next seven days, except for the chance of a little light rain on Monday, Meteorlogix said. In Australia, the outlook for the week appears drier, with colder conditions in the east, warmer west, the firm said.


Wheat production in Western Australia state - one of the global wheat trade's major swing producing regions - could reach 10 million metric tonnes this year, the president of the grains section at lobby Western Australian Farmers' Federation said. Production estimates for the state's crop currently range from 8 million tonnes to 10 million tonnes, with the actual total depending on spring weather conditions ahead of a harvest, mostly in November and December, he said.

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