August 25, 2008


US Wheat Outlook on Monday: 8-10 cents up, following CBOT corn and soy



U.S. wheat futures are expected to start Monday's day session higher on spillover support from Chicago Board of Trade corn and soybeans.


Nearby CBOT September wheat is called to open 8 to 10 cents per bushel higher. In overnight electronic trading, CBOT September wheat jumped 9 1/2 cents to US$8.75, while CBOT December wheat rose 11 1/2 cents to US$9.02.


Wheat should look to the row crops for direction amid a lack of fresh fundamental news, traders said. Corn and soybeans are poised to rise on jitters about the potential for yield loss due to dry weather in the U.S. Midwest.


If corn and soybeans are climbing, "you can't expect wheat to sit still," a CBOT floor trader said. Weakness in the U.S. dollar could add to the bullish tone, as a lower greenback gives foreign importers more buying power, an analyst said.


CBOT December wheat Friday closed near the session low amid bearish a steep decline in crude oil and a rally in the U.S. dollar. The bulls "now appear to have become exhausted at last week's high and have faded," a technical analyst said.


The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$8.66. Bulls' next upside price objective is to push and close the contract above solid resistance at last week's high of US$9.57.


First resistance is seen at US$9.00 and then at US$9.12 3/4. First support lies at Friday's low of US$8.88 and then at US$8.75.


Speculative funds remain short CBOT wheat futures and options. They cut short positions by 7,455 contracts, leaving them net short 16,697 contracts as of Aug. 19, the Commodity Futures Trading Commission said in a supplemental report issued Friday.


The U.S. Department of Agriculture at 4 p.m. EDT is set to issue its weekly crop progress report. The U.S. spring wheat harvest advanced last week following rain delays, traders said.


There are "no significant concerns for maturing wheat or the harvest during the next five days," DTN Meteorlogix said. The six to 10 day period may turn somewhat wetter, leading to possible harvest delays, the private weather firm said.


In Australia, showers are expected through most wheat areas during the middle to late part of this week. The heaviest activity appears to be for the eastern wheat belt, Meteorlogix said.


"Should this system verify it would be very favorable for vegetative to jointing wheat in New South Wales and southern Queensland," the firm said.


In Argentina, more rain would benefit crop planting, emergence and development, especially in northern portions of the central grain belt. Some rainfall is possible early this week, mainly in eastern and northern Buenos Aires and southern Sante Fe, Meteorlogix said.

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