November 17, 2008

 

US Wheat Outlook on Monday: Down slightly following overnight losses

 

 

U.S. wheat futures are expected to open slightly lower Monday following overnight losses, as the market appears poised to give back some of its gains from last week, analysts said.

 

Wheat is called 1 to 3 cents lower. In overnight trading, December Chicago of Trade wheat was down 1 cent to US$5.53 1/4 and March wheat was down 1 1/4 cents US$5.73 1/4.

 

The market had climbed last week, after buyers were encouraged by CBOT December wheat continuing to hold support at US$5. Analysts said short-covering helped boost the market Friday.

 

There is little news to prompt a change in wheat's direction to the upside, analysts said. Shawn McCambridge, senior grains analyst with Prudential-Bache, added that outside markets are slightly bearish Monday. Demand remains weak, analysts added.

 

"We didn't really see any business develop over the weekend, which is disappointing," said Shawn McCambridge, senior grains analyst for Prudential-Bache. The market will have limited upside potential until export business picks up, he said.

 

Technically, bears still have the overall near-term advantage, a technical analyst said, although he said more short-covering was possible in the near term.

 

The next downside price objective is pushing and closing prices below solid technical support at the October low of US$4.96 1/2, the technical analyst said. The next upside price objective is to push and close December futures prices above solid technical resistance at the November high of US$5.87 3/4 a bushel.

 

First resistance is seen at Friday's high of US$5.59 3/4 and then at last week's high of US$5.68 1/2. First support lies at US$5.50 and then at US$5.40.

 

On Friday, private analytical firm Informa Economics estimated 2009-10 all-wheat plantings at 60.1 million acres, down from the USDA's estimate for 63 million acres in 2008-09. Winter wheat is planted in the fall for harvest in the spring, while spring wheat is planted in the spring for harvest at the end of the summer.

 

Speculative funds cut 6,108 contracts from their CBOT wheat long positions and added 1,855 contracts to their short positions, putting them net short 36,941 contracts, the CFTC said Friday.

 

The weekly commitment of traders report also showed commercial funds added 2,503 contracts to their long positions and cut 9,996 contracts from their short positions, putting them net short 77,406 contracts. Index funds added 744 contracts to their long positions and added 2,983 contracts to their short positions, putting them net long 136,085 contracts, the CFTC said.