August 13, 2008
US Wheat Outlook on Wednesday: 3-5 cents higher on demand, spillover support
Solid export demand and spillover support from Chicago Board of Trade corn are expected to lift U.S. wheat futures at the start of Wednesday's day session.
Chicago Board of Trade September wheat is called to open 3 to 5 cents per bushel higher. In overnight electronic trading, CBOT September wheat was up 4 3/4 cents at US$7.95, while CBOT December wheat was up 4 cents at US$8.19 1/4.
Global demand for wheat remains strong as importing countries continue to rebuild supplies after draining ending stocks last marketing year, an analyst said. The U.S. Department of Agriculture on Tuesday raised its projection for 2008-09 world wheat production, but the steady pace of export sales tempers the bearish impact of that forecast, he said.
Strength in CBOT corn and soybeans should add support to wheat, a CBOT floor trader said. There are ideas corn may have set a temporary bottom Tuesday, when the market slumped before reversing to a higher close.
Corn and soybeans look as though they want to run higher after Tuesday's release of USDA crop reports, which pegged 2008-09 U.S. corn production above the average trade estimate and soybean production below the average trade estimate, the trader said. The bearish forecast for a hefty U.S. corn crop seems to be built into the market already and should not weigh down the grains, an analyst said.
CBOT September wheat could attract some fresh buying interest if it climbs above last week's high of US$8.25 3/4, a trader said. There is technical support in the area between US$7.30 and US$7.46, he said.
For CBOT December wheat, the next downside price objective for the bears is pushing and closing prices below psychological support at US$8.00, a technical analyst said. Bulls' next upside price objective is to push and close December wheat above solid technical resistance at last week's high of US$8.50 3/4, he said.
First resistance is seen at Tuesday's high of US$8.24 and then at this week's high of US$8.38. First support lies at US$8.00 and then at this week's low of US$7.87.
In the Southern Hemisphere, conditions mostly favor Australia's wheat, DTN Meteorlogix said, although the next significant chance for rain does not show up on forecast maps until next Wednesday. If the rains come through, southeast wheat areas would get some showers, the private weather firm said.
In Argentina, more rain would benefit crop planting, emergence and development, especially in northern portions of the central grain belt. Showers are possible in the region during the next 10 days but most of the activity looks light, Meteorlogix said.