July 16, 2009

 

US Wheat Outlook on Thursday: Seen lower with neighboring markets

 

 

U.S. wheat futures are poised to start lower along with neighboring markets on Thursday as choppy trading continues.

 

Chicago Board of Trade September wheat is called to open 3 to 6 cents per bushel weaker. In overnight electronic trading, CBOT September wheat fell 5 cents to US$5.29 3/4, and CBOT December wheat lost 5 cents to US$5.56 1/2.

 

Wheat looks ready to continue a see-saw pattern after rising Monday, falling Tuesday and ending higher Wednesday, a trader said. Corn and soybeans are called to open lower after closing lower Wednesday.

 

Speculative funds have a large net short position in CBOT wheat, which is seen as supportive, but fundamentals for the market remain mostly bearish, a trader said. There is plenty of wheat to go around in the world, he said.

 

CBOT September wheat should maintain a choppy, range-bound trade of US$5.10 to US$5.60, according to AgResource Company. Adverse weather and the building of El Nino are needed for a greater rally, the firm said.

 

Some areas of the world are struggling with weather problems, such as dryness in Argentina, but overall supplies are considered comfortable.

 

The Buenos Aires Cereals exchange on Wednesday trimmed its forecast for 2009-10 wheat area to 2.75 million hectares, down 1.8% from last week's forecast. Area is expected to be down 40.2% on the year, and represents the smallest area going to wheat in over 100 years.

 

In the Black Sea region, dryness has been the main risk to wheat in the Urals and western Kazakh so far, but there appears to be at least some risk that very hot temperatures will develop in the area early next week, according to Meteorlogix. Heat would further stress jointing to reproductive wheat in the region, the private weather firm said.

 

Strategie Grains marginally increased its European Union 2009-10 soft wheat production forecast to 126.5 million tonnes from 126.3 million tonnes in June.

 

In other news, weekly U.S. wheat export sales for the week of 422,500 tonnes were within trade estimates of 300,000 tonnes to 500,000 tonnes but down 28% from last week. Top buyers for the week ended July 9 were Nigeria, which bought 243,500 tonnes, Mexico, which bought 70,200 tonnes, and Brazil, which booked 51,000 tonnes, according to the U.S. Department of Agriculture.

 

Japan, meanwhile, said it purchased 108,000 tonnes of wheat, including 66,000 tonnes of U.S. wheat, in a routine tender concluded Thursday. The shipment is expected to arrive in September.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$5.38, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.80, he said.