June 17, 2008
US Wheat Outlook on Tuesday: Likely moving lower before higher
Lower overnight trade portends a weak wheat trade Tuesday morning, a CBOT floor trader says.
"It looks like we'll go lower before we go higher," the trader said. "We're definitely overbought. Technically, we've overshot ourselves."
Still, with rallies in corn routinely dragging wheat along the for the ride, "people are nervous to sell," the trader said.
The U.S. Department of Agriculture's Crop Progress Report, released Monday afternoon, marked little change for wheat. Winter wheat conditions held steady at 22% in the very-poor-to-poor category, while the very-poor-to-poor spring wheat conditions slipped by 1 percentage point since last week.
The report suggests "a negative bias," reflected in the overnight grain trade, "since the tornados, hail, and heavy rains didn't obviously cause worse conditions," said Mike Zuzolo of Risk Management Commodities in Lafayette, Ind.
But Dave Lehl of Benson Quinn Commodities expects wet weather to lend all of the grain markets some support.
"Harvest weather specific to the hard red region looks to improve later in the week, while current wet conditions cause delays," Lehl said.
Crop Weather
Warmer temperatures on the Northern Plains should help agronomic conditions for spring wheat, according to a DTN Meteorologix forecast.
But "widespread thunderstorms during this week will be mostly unfavorable for maturing wheat and could cause some delay to the harvest," the private weather firm said.
"It still looks like the heaviest rains will stay west and south of the main (Midwestern) crop areas during the next 3 to 5 days," the firm said. "This does not mean no rain but it does mean low coverage of significant shower activity. This may allow fields to slowly dry out while the rivers gradually recede. Longer range charts are more uncertain as there could be some heavier storms in the western Midwest region during the 6-to-10-day period."
