US Wheat Outlook on Monday: Higher inline with equities, crude gains

 

 

U.S. wheat futures are expected to open Monday's trading session modestly higher, in line with gains in equities futures and crude oil.

 

Chicago Board of Trade December wheat is called to open 7 to 10 cents per bushel higher. In overnight electronic trading, CBOT December wheat added 7 3/4 cents to US$5.74.

 

"Wheat should follow the other markets higher this morning, but buying interest remains relatively restrained," said Bryce Knorr, Farm Futures senior editor.

 

Wheat bears are gunning to push and close "below major psychological support" of US$5," a technical analyst said, marking first support at Friday's low of US$5.55 1/4 and then US$5.50.

 

As bulls move to penetrate psychological technical resistance at US$6, first resistance lies at Friday's high of US$5.71 1/4 and then US$5.80, the technician said.

 

"Noting the violent weakness in Baltic Dry freight...we suspect that that shall be a strong aid to grain prices over the course of the next several days and weeks, for where freight costs had been egregiously high and thus a de-limiting factor on export trade, they are now inordinately weak and are a beneficial factor instead... sufficient at least to offset the strength of the US dollar," Dennis Gartman noted in Monday's The Gartman Letter.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report Monday at 4 p.m. EDT.

 

Traders the report to include the first condition report for newly seeded winter wheat, Knorr said, adding "the crop on the Plains spears off to a good start, with good rains following planting and already above average soil moisture."

 

Dry conditions will give way to showers and thunderstorms Tuesday night and into Wednesday across the central and southern Plains; temperatures should range from 38-77 degrees Fahrenheit, DTN Meteorlogix said.

 

The rain, which will move into the Midwest around Wednesday, should benefit planting and development efforts, the private weather forecasting firm said.

 

"Soil moisture mostly will favor early growth of wheat, except for portions of Indiana and Ohio where it may still be too dry," DTN said.

 

In global trading news, Paris milling wheat futures trade slightly higher in quiet markets, continuing to hold steady from Friday's close. Last week's news of the European Union reintroducing import duties on grains "adds to the short term positive sentiment," says Grainfarmers.

 

Bangladesh tendered for 3.7 million bushels, and Knorr noted, a couple other deals are working out of the Middle East. Dry weather has forced a 9.5% downgrade in an Australian wheat production forecast to 21.0 million metric tonnes from a previous estimate of 23.2 million tonnes, according to analysis issued Monday by Citigroup Global Markets. Citi's estimate is around midpoint of industry expectations, which sit within a range of 19 million-23 million tonnes, about two-thirds of which would be available for export, making Australia a major supplier to the global trade.