October 15, 2008

  

US Wheat Outlook on Wednesday: Slightly lower, watching outside markets

  

 

Losses in equities and crude oil are expected to drag U.S. wheat futures lower at the start of Wednesday's day session, with the grains continuing to take direction from outside influences.

 

Chicago Board of Trade December wheat is called to open 2 to 3 cents per bushel lower. In overnight electronic trading, CBOT December wheat dropped 2 1/2 cents to US$5.70 1/2.

 

Traders will watch gyrations in the financial and outside markets amid a lack of confidence in the economy, an analyst said. U.S. wheat tumbled late in the session Tuesday on weakness in the stock market and crude oil.

 

Bears still have the solid near-term technical advantage in U.S. wheat, a technical analyst said. Prices are in a six-month-old downtrend on the daily bar chart, he said.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$5.50, the technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at Tuesday's high of US$6.09 1/2, he said.

 

First resistance is seen at US$5.86 1/4 and then at US$6.00. First support lies at this week's low of US$5.65 1/4 and then at last week's low of US$5.57 3/4.

 

U.S. wheat is "still a bear market," FuturesTechs said in a research note. "No questions asked."

 

Speculative funds remain net short in CBOT wheat, which may be the market's most supportive factor, a trader said. Fundamentals are bearish amid forecasts for record world production, he said.

 

There was little fresh news out for the wheat markets to feed on, a trader said. U.S. winter wheat planting was 73% complete as of Sunday, on par with the five-year average and with industry expectations.

 

The U.S. Department of Agriculture, in its weekly crop progress report, said 46% of the winter wheat crop had emerged, above the average of 44%. Rains last weekend and week should provide "adequate to surplus moisture" for the wheat crop, although the wetness could delay further planting, DTN Meteorlogix said in a forecast.

 

Dryness remains a concern in Southern Hemisphere wheat areas, as Australia and Argentina are major producers and exporters. The next chance for showers in Argentina appears to be early next week, Meteorlogix said.

 

In Australia, dryness in South Australia and western Victoria looks as thought it will continue, Meteorlogix said. Showers through New South Wales and Queensland during the weekend and early this week may favor filling wheat but could be unfavorable for maturing wheat and the early harvest in the north, according to the private weather firm.