US Wheat Outlook on Tuesday: Higher on overnight gains, short-covering
Wheat is called 2 to 3 cents higher. In overnight trading, September wheat was up 2 1/2 cents to US$5.23 per bushel and December wheat was up 2 1/4 cents to US$5.50.
A weaker dollar pushed the market higher overnight, traders said, but doesn't appear to be much of a factor Tuesday morning. Some short-covering has been prompted by the fact that September wheat has held above its contract low of US$5.12 this week, traders said.
The trade is eyeing a Commodity Futures Trading Commission hearing that starts today on wheat convergence. Concern that the government will move to limit the role of speculators in the wheat market has weighed on the market recently, traders said.
"Unlike last week's Congressional Hearing, a much more two sided exchange of testimony is expected," AgResource said in a market commentary. "Nonetheless, the meeting is expected to act as a drag on any wheat/crude oil rally this morning."
Monday's crop progress report from the U.S. Department of Agriculture showed that the crop remains in good shape.
The USDA said 74% of U.S. spring wheat crop was in good-to-excellent shape as of Sunday, up 1 percentage point from last week. That was above trader expectations of an unchanged to 2-percentage-point decline in ratings. But a trader said the improvement wasn't a surprise and shouldn't affect the market.
"They've been getting decent rains," the trader said. "I think prices have been reflecting that, too."
Winter wheat was 79% harvested as of Sunday, compared to 79% last year and the average of 84%. A week ago, 72% of the crop was harvested.
Along with a strong U.S. crop and few problems worldwide, there is relatively weak demand, analysts say.
"The U.S. should have plenty of wheat to export, but now we need to see some demand," Top Third Ag managing partner Mark Gold said in a market commentary.
The trade will also be keeping an eye Tuesday on any news from the Wheat Quality Council's annual hard red spring wheat tour, which begins Tuesday.
The next downside price objective for the bears is pushing and closing December prices below solid technical support at the July low of US$5.38, a technical analyst said. The bulls' next upside price objective is to push and close July futures prices above solid technical resistance at the July high of US$5.80 a bushel.
First resistance is seen at Monday's high of US$5.50 3/4 and then at US$5.60, the technical analyst said. First support lies at US$5.38 and then at US$5.25.
In export news, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 144,000 metric tonnes of wheat in a tender to be concluded Thursday, an agriculture ministry official said. Of that, 104,000 is from the U.S.
