June 17, 2009
US Wheat Outlook on Wednesday: Fundamentals, outside markets lend pressure
A weaker start is expected for U.S. wheat futures on Wednesday, pressured by generally bearish factors for wheat and slumping outside markets.
Overnight, Chicago Board of Trade July wheat fell 5 3/4 cents to US$5.60 a bushel.
Follow-through selling after a lower close on Tuesday could appear and a firmer dollar and lower crude oil, metals and softs markets will give wheat further reasons to fall.
Bryce Knorr, senior editor at Farm Futures, said in looking at technical charts wheat could be in for weakness. "The big break over the last two weeks has turned the short-term trend bearish, reflecting the seasonal tendency for prices to work lower this time of year," he said.
A technical analyst said wheat bears have the near-term advantage and the next price objective for the bears is a close under US$6 for December wheat.
Knorr noted Tuesday's break came on higher volume with greater open interest. It could mean that "harvest pressure is beginning to bring new sales into the market. Warmer and drier weather over the South and southern Plains should allow more winter wheat to be cut in the coming week, which could add to the pressure."
DTN Meteorologix said weather should be conducive for harvesting in the southern and central Plains, although there is a chance for a thunderstorm or two. Temperatures are generally forecast to be above normal there. In spring wheat areas, heavy storms near Bismark, N.D. during the past couple of days have caused some severe flooding in the area. Otherwise the region benefits from warmer temperatures and continued scattered shower activity during the 10 day period.
In other news, the Organization for Economic Cooperation and Development and the Food and Agricultural Organization said Wednesday that inflation fears sparked by the big spike in food prices over the past two years are rapidly abating, and agricultural commodity prices are unlikely to muster large gains over the coming decade.
