June 23, 2008

 

US Wheat Outlook on Monday: Seen 14-16 cents lower, following weak corn

 

 

Setbacks in Chicago Board of Trade corn and soybean futures are expected to drag U.S wheat futures lower at the start of Monday's day session.

 

Chicago Board of Trade September wheat is called to open 14 to 16 cents per bushel weaker. In overnight electronic trading, CBOT September wheat fell 15 1/4 cents to US$8.92.

 

Wheat, which has been looking to corn and soybeans for direction lately, should follow a retreat in the row crops. Fundamentals for wheat are seen as bearish, as the U.S. harvest is continuing and industry members expect the world will bring a big crop online.

 

"We've been a follower," a CBOT wheat trader said. "We'll continue to be."

 

Harvest progress in the U.S. is adding seasonal pressure, as drier weather in the southern Plains allowed cutters to get back in the fields this weekend after rain delays last week, an analyst said. The U.S. Department of Agriculture will update its estimate for harvest progress in the weekly crop progress report, due out at 4 p.m. EDT.

 

"Wheat fields are finally beginning to dry out in much of the southern half of Kansas, allowing many farmers to begin wheat harvest over the weekend," said Kansas Wheat, a producers' group.

 

There wasn't much other fresh fundamental news out for wheat during the weekend. Egypt's state-owned General Authority for Supply Commodities, or GASC, said Sunday it bought 90,000 metric tonnes of Russian wheat in a tender.

 

The deal wasn't surprising, traders said, and the wheat looks as though it was in store. U.S. wheat continues to be at a competitive disadvantage to the Black Sea due to high freight rates, they said.

 

In Argentina, rain across much of the agricultural heartland provided a needed boost to the young wheat crop and improved planting conditions, the Buenos Aires Cereals Exchange said Friday. More showers lingered in eastern areas early in the weekend before conditions turned drier, according to DTN Meteorlogix.

 

In Australia, the next significant chance for scattered showers looks to be in West Australia on Friday and Saturday, Meteorlogix said. More rain is needed to end dryness concerns through the central and east wheat belt, although conditions have improved following recent moisture, the private weather firm said.

 

Australia's wheat exports will more than double next fiscal year on the back of an expected rebound in production, according to the government's chief commodities analyst, the Australian Bureau of Agricultural and Resource Economics. Wheat exports are expected to rise to 14.1 million metric tonnes, compared with 6.8 million tonnes in the fiscal year ending June 30, the bureau said in its quarterly Australian Commodities outlook.