October 28, 2008

 

US Wheat Outlook on Tuesday: 8-10 cents higher on corn, soybean lead

 

 

U.S. wheat futures are expected to open 8 cents to 10 cents a bushel higher Tuesday, following sharply higher corn and soybean futures on overnight gains and surprise cuts in planted area and production from the U.S. Agriculture Department.

 

Using words like "shocking" and "unprecedented" to describe the late-season changes, analysts said wheat would get a boost from the bullishness contained in the corn and soybean data.

 

While no supply and demand or production changes were made to the wheat balance sheets, a cut of 1 million acres to corn's planted and harvested area and a resulting 167-million-bushel cut to 2008-09 production, taking the total to 12.033 billion bushels, is expected to have a bullish spillover effect on wheat, analysts said.

 

In addition, soybean planted and harvested areas were revised 1.1 million acres lower, taking production down 45 million bushels from the Oct. 10 projection to total 2.94 billion bushels, the USDA said.

 

The U.S. winter wheat is off to a good start, led by top producer Kansas with a 65% good-to-excellent rating, down from 80% last week but a strong number nevertheless, said Sid Love, analyst with Kropf & Love Consulting in Overland Park, Kan.

 

The total U.S. winter wheat crop rated 65% rated good to excellent, up from 55% last year, the USDA reported.

 

Ample soil moisture and a rise in temperatures over the next week or so are expected to favor early growth and development, while allowing producers to finish planting the last of the crop.

 

The Oklahoma wheat crop was 68% good to excellent, while the Texas crop, where conditions are drier, rated 52% good to excellent, the USDA said.

 

"It's always dry in Texas," said Love.

 

Private forecaster DTN Meteorlogix said dry, warm weather will favor planting efforts for at least the next five to six days, while warmer temperatures favor wheat germination and early growth.

 

In addition to the crop news, commodity markets in general are expected to receive a boost from a sharply higher open on Wall Street, firmer crude oil prices and improved investor sentiment among markets in general, a broker said.

 

In other news, Australian Crop Forecasters, or ACP, trimmed harvest expectations for the 2008-09 wheat crop by half a million metric tonnes to 19.5 million tonnes, citing hot weather in the southeastern grain belt. While conditions are dry in the southeast, western Australia has received good rainfall, the ACP said.