US Wheat Outlook on Tuesday: Seen starting down; positioning expected  

 

 

Follow-through selling from the overnight session and pressure from outside markets are expected to weigh on U.S. wheat futures early Tuesday, but trading could be choppy ahead of the release of government crop data.

 

Chicago Board of Trade May wheat is called to open 3 to 5 cents per bushel lower. In overnight electronic trading, CBOT May wheat dropped 4 3/4 cents to US$4.90 1/4.

 

Wheat pulled back in a "Turnaround Tuesday" scenario after rising Monday, a CBOT floor analyst said. Strength in the U.S. dollar and losses in crude oil and precious metals set a negative tone for the grain markets, he said.

 

Traders are waiting for the U.S. Department of Agriculture to issue its monthly supply and demand estimates at 8:30 a.m. EST Wednesday. The government is also slated to release fresh U.S. corn and soybean production and yield estimates. There should be positioning in the markets ahead of the reports, a trader said.

 

"I can see us bouncing back and forth," said Larry Glenn, broker and analyst at Frontier Ag. "It's going to be a light volume day like yesterday. I think they're just going to get positions squared ahead of the report."

 

A pre-report survey by Dow Jones Newswires indicates analysts expect the USDA to cut its estimate for U.S. wheat ending stocks to 971 million bushels from its February estimate of 981 million. The lower forecast is "still a lot" of wheat, Glenn said.

 

"We need something to shock the market, and I don't know that there's much out there," he said. "It seems like all the news is history."

 

Japan said it was seeking 152,000 tonnes of wheat, including 85,000 tonnes from the U.S., in a routine tender for shipment between April 21 and May 20. Rain expected in the central and southern U.S. Plains, meanwhile, would benefit the hard red winter wheat crop heading into the spring growing season, according to DTN Meteorlogix.

 

The next downside price objective for bears is pushing and closing CBOT May wheat below solid technical support at the February low of US$4.80 3/4, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at last week's high of US$5.26, he said.

 

First resistance is seen at US$5.00 and then at US$5.10. First support lies at last week's low of US$4.92 1/4 and then at US$4.80 3/4, the analyst said.