U.S. Wheat Futures Rise Amid Firm Overnight Prices and Improving Weather Conditions

Strategic Insights -

U.S. wheat futures are predicted to open higher on Monday due to firm overnight prices influenced by a break in the U.S. dollar and gains in energy futures. Brokers attribute the expected increase to favorable weather conditions, including scattered rains and warmer temperatures in the drought-stricken Southern Plains and cooler weather in the Northern Plains. Technical analysts note that a close above resistance at $3.75 will provide bulls with fresh upside momentum, while a close below Friday's low of $3.57 1/2 would give bears fresh downside near-term technical momentum.

Key Takeaways:

  • U.S. wheat futures are expected to open 2-4 cents higher on Monday, influenced by firm overnight prices and improved weather conditions.
  • Scattered rains and warmer temperatures in the Southern Plains, combined with cooler weather in the Northern Plains, are expected to benefit the wheat crop.
  • Technical analysts identify resistance at $3.75 and support at $3.57 1/2 as critical levels for wheat futures.
  • The CFTC reported that speculators were net long 70,017 lots of CBOT wheat futures and options, with a significant increase in long holdings for MGE spring wheat.
  • Brokers expect a slight drop in U.S. winter wheat crop conditions in the USDA's Monday afternoon report, with Kansas, Oklahoma, and Texas reporting decreases in good-to-excellent crop conditions.
  • As of April 16, 10% of the U.S. spring wheat crop had been planted, behind last year's 21% and the five-year average of 16%.

Statistics:

  • Overnight e-CBOT session: most-active July wheat closed up 3 cents at $3.68 1/4.
  • CFTC report: speculators were net long 70,017 lots of CBOT wheat futures and options; long 48,430 lots of KCBT wheat futures and options; and long 13,138 contracts of MGE spring wheat futures and options.
  • U.S. winter wheat crop conditions: 39% in good-to-excellent condition, slightly below last week's 41% and well below last year's 69%.
  • Kansas winter wheat crop conditions: 38% in good-to-excellent condition, down from 42% last week.
  • Oklahoma winter wheat crop conditions: 5% in good condition, down from 11% last week.
  • Texas winter wheat crop conditions: 4% in good-to-excellent condition, versus 7% last week.
  • U.S. spring wheat crop planted as of April 16: 10%, behind last year's 21% and the five-year average of 16%.

Sources:

  • Dow Jones Commodities News via Comtex, April 24, 2006
  • Dow Jones Newswires, April 24, 2006
  • CFTC report, Friday (no date provided)
  • USDA report, Monday (no date provided)
  • Susan Schwendener, Dow Jones Newswires, 312-341-5780, sue.schwendener@dowjones.com