August 8, 2006

 

US Wheat Outlook on Tuesday: Widespread CBOT losses weigh on wheat

 

 

U.S. wheat futures are called to open weaker Tuesday, pressured by losses incurred during overnight trade on the Chicago Board of Trade; expected weakness in corn and soybeans are also seen having a bearish influence.

 

Benchmark CBOT September wheat is called to open 2 to 3 cents a bushel weaker.

 

In e-cbot overnight trade, September wheat was down 4 1/4 cents at US$3.88 3/4 a bushel and December wheat fell 4 1/2 cents to US$4.09 1/4.

 

"Corn and soybeans are what everyone is talking about (Tuesday) and that's going to influence wheat," said one long-time floor analyst. "We're watching that and it's going to have an overriding influence."

 

DTN Meteorlogix weather said the North Plains will see scattered shower activity in the central and east locations during the five-day period, but the moisture isn't enough to cause any significant harvest delays. Temperatures in the corn belt for developing corn and soybean crops is also beneficial for development. Overseas, there is no significant rainfall expected in the dry western wheat areas of central Argentina during the next 7 days.

 

A technical analyst said for wheat to rally it will take a close back above solid technical resistance at last week's high of US$4.25 to provide the bulls with fresh upside technical momentum. The next downside price objective for the bears is closing prices below solid support at US$4.10 a bushel. Monday's high of US$4.15 1/2 is first resistance, with further resistance at US$4.20. First support lies at US$4.10 and then at US$4.08.

 

Even though the U.S. Department of Agriculture is set to release its crop production and supply/demand reports on Friday, traders said market participants will likely start squaring positions ahead of the data's release.

 

In export news, Syria said it sold 20,000 metric tonnes of Syria wheat for an August-September shipment. It was also looking to sell 50,000 tonnes of soft milling wheat and 50,000 tonnes of hard wheat for shipment through the port of Tartous and another 25,000 tonnes of soft milling wheat and 25,000 tonnes of hard durum wheat for shipment through the port of Lazikiya, but canceled the tender.

 

India issued a tender to import at least 50,000 metric tonnes of wheat for delivery in September and October, a senior government official said Tuesday. India is importing wheat on behalf of private buyers such as flour mills, and is seeking wheat from any origin at the most competitive price.

 

Analysts said it's possible the market might try to trade both sides of unchanged, but with little definitive demand news, there's not much reason for the market to rally. "There are these tenders around, but we don't get much of the business, so it doesn't help," the floor analyst said.

 

Australian wheat exporter AWB resumed talks Tuesday with the Grain Board of Iraq over possible future sales, AWB Chairman Brendan Stewart said. Tonnage is not being discussed, as the event is an "initial reengagement meeting to discuss process going forward." Iraq suspended commercial dealings with AWB in February following revelations at an Australian inquiry investigating kickbacks of USUS$221.7 million paid by AWB to Saddam Hussein's regime to secure wheat sales under a U.N. oil-for-food program.