June 18, 2009

 

US Wheat Outlook on Thursday: Seen mixed, waiting for Egypt results

 

 

U.S. wheat futures are expected to start mixed Thursday as traders eye other markets and wait for the results of an Egyptian tender.

 

In overnight electronic trading, Chicago Board of Trade September wheat gained 3 cents to US$5.97 3/4 a bushel. CBOT December wheat rose 1/4 cent to US$6.21 1/2.

 

Traders continue to watch outside markets for direction, particularly the U.S. dollar. Crude oil is not providing much direction so far, and the dollar is a little firmer, which is seen as a bearish influence, traders said.

 

"If the dollar remains firm here, it's probably going to pressure us," a CBOT floor analyst said.

 

Wheat ended slightly higher Wednesday in a bounce from recent sell-offs and has room to recover more, a trader said. However, expectations that the U.S. winter wheat harvest will advance could weigh on prices, an analyst said.

 

Maturing hard red winter wheat and the wheat harvest will benefit from a drier, hotter weather pattern in the central and southern U.S. Plains, according to private weather firm DTN Meteorlogix. However, some thunderstorm activity in central and northern wheat areas could slow cutting from time to time.

 

Drier conditions would be beneficial for soft red winter wheat in the eastern U.S., as wet weather has encouraged the development of diseases in the crop, a CBOT trader said. The final impact of the diseases will probably not be known until the wheat is cut, he said.

 

The results of an Egyptian tender for wheat will give the markets a better idea of world prices, an analyst said. U.S. wheat is thought to be priced higher than other competitors, such as E.U. wheat, he said.

 

Weekly U.S. wheat export sales were nothing to get excited about, traders said. Net sales of 268,800 tonnes for the week ended June 11 were within trade expectations of 200,000 tonnes to 400,000 tonnes.

 

Japan, meanwhile, said it bought 127,000 tonnes of wheat, including 86,000 tonnes from the U.S., in routine a tender concluded Thursday. The shipment is expected to arrive Aug. 11 to Sept. 10.

 

In other news, Strategie Grains said it lowered its European Union 2009-10 soft wheat crop estimate by 2.6 million tonnes from May to 126.3 million tonnes. Dryness has trimmed production in countries across Europe, including Hungary, Romania, the U.K. and Spain, it said.

 

The next downside price objective for bears is pushing and closing CBOT December wheat below solid technical support at US$6.00, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.75, he said.

 

First resistance is seen at US$6.27 1/2 and then at US$6.40. First support lies at US$6.10 3/4 and then at US$6.00, he said.