April 8, 2009
US Wheat Outlook on Wednesday: Seen lower on follow-through weakness
U.S. wheat futures are poised to start lower Wednesday on follow-through selling, although traders may square up some positions later in the session, analysts said.
Chicago Board of Trade May wheat is called to open down 3 to 5 cents per bushel. In overnight electronic trading, CBOT May wheat stumbled 4 cents to US$5.35 3/4.
Wheat is looking at a lower opening following "real poor technical action from the last two trading sessions," said Brian Hoops, president of Midwest Market Solutions. The market "may try to consolidate some of that technical action," he said.
Trading could turn two-sided on positioning after the sell-offs Monday and Tuesday, Hoops said. CBOT May wheat was down 23 3/4 cents during the first two days of the week.
Traders are starting to look ahead to the U.S. Department of Agriculture's April supply and demand report, due out at 8:30 a.m. EDT on Thursday and to the upcoming three-day weekend, analysts said. The USDA report, which will include updated estimates on carryover, is not expected to be a major market mover for wheat, traders said.
Market participants may be reluctant to take on new positions ahead of the long weekend amid uncertainty about the weather, an analyst said. A freeze early Tuesday morning in the U.S. Plains may have hurt hard red winter wheat, but rainfall this weekend could help the crop recover, DTN Meteorlogix said in a forecast.
It will be at least a week before farmers have a better sense of the extent of any damage from the freeze, agronomists said. Wheat in the jointing stage of development can suffer yield losses if temperatures drop low enough for long enough.
"The market's not really too concerned about the freeze," Hoops said.
In other news, the Iraqi cabinet has approved the purchase of 250,000 tonnes of hard wheat, with 100,000 tonnes each coming from the U.S. and Russia and 50,000 from Canada, a government spokesman said. News of the sale is already in the markets, Hoops said.
