US Wheat Outlook on Wednesday: Down 2-3 cents on follow-through, spillover

 

 

Chicago Board of Trade March wheat is called to open 2 to 3 cents per bushel lower. In overnight electronic trading, CBOT March wheat slipped 3 1/4 cents to US$5.81 1/2.

 

Wheat is expected to keep an eye on the neighboring CBOT corn and soybean markets, which were weaker overnight, a CBOT floor broker said. Corn and soybeans are trading on weather in Argentina as traders wait to see whether rain can help ease dryness, he said.

 

"Wheat is a bystander among the grains these days," Fortis said in a market comment.

 

Indeed, there is "not much in the world of wheat" as far as fresh fundamental news goes, the broker said. World demand is solid, but world supplies are also plentiful, he said.

 

Global values have firmed lately, which has been seen as supportive because it makes U.S. wheat more competitive on the world export market, analysts said. The U.S. Department of Agriculture on Thursday will issue its weekly export sales data.

 

There continues to be talk that production problems in Argentina due to drought could send demand to North America. Brazil, the top buyer of Argentine wheat, could fill its needs from the U.S. or Canada, traders said.

 

"Export markets remain active in wheat, and the apparent sideling of Argentina should keep buying activity at a strong pace," Fortis said.

 

CBOT March wheat Tuesday closed lower and nearer the session low amid pressure from weak neighboring market and profit-taking. Bears have the near-term technical advantage, while bulls are "worried about a looming 'February break' seasonal phenomenon," a technical analyst said.

 

The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at the January low of US$5.48 1/4, the analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at the January high of US$6.46 1/4, he said.

 

First resistance is seen at Tuesday's high of US$6.01 and then at this week's high of US$6.11. First support lies at Tuesday's low of US$5.81 1/4 and then at this week's low of US$5.75 1/4.

 

It is cold in the U.S. central and southern Plains, but not cold enough to harm hard red winter wheat, private weather firm DTN Meteorlogix said. The main concern for this crop is dryness over southwest Kansas, Oklahoma and Texas, forecasters said. There is little chance for improvement in the locations during the next 10 days.

 

Rains have fallen in West Australia wheat belt during the past 24 hours, helping to recharge soil moisture for the next winter wheat crop, Meteorlogix said. The area is going to need "generous and frequent" late summer and autumn rains in order to ensure a favorable start to the next planting season for wheat, the firm said.