August 22, 2006

 

US Wheat Outlook on Tuesday: Steady; awaiting fresh export demand news

 

 

U.S. wheat futures are poised for a steady opening Tuesday, following overnight themes, as the market awaits fresh demand related news to break futures out of their late summer doldrums.

 

In overnight electronic trading, Chicago Board of Trade September wheat was unchanged at US$3.65 3/4 and CBOT December wheat was 3/4c lower at US$3.84 3/4.

 

Traders anticipate a low volume sideways session, with the markets potentially testing both sides of unchanged levels unless fresh fundamental influences surface to provide clear direction, analysts said.

 

Traders have been looking for a bounce in prices following recent setbacks, but without demand news, futures are seemingly stuck in a range, with downside movement the path of least resistance.

 

Speculative fund activity has waned recently, keeping trading volumes light. Traders say prices still need to move to levels that will spur consumptive buying. New demand would provide definitive strength, instead of the short lived advances tied to demand rumors and small lot cargo purchases by key importing nations, said a CBOT commission house broker.

 

A market technician said serious near-term chart damage has occurred recently. It will take a close back above psychological resistance at US$4.00 basis CBOT December wheat to begin to provide some fresh upside technical momentum. The next downside price objective is closing prices below solid support at Friday's low of US$3.76 3/4 a bushel.

 

First resistance is seen at US$3.90 and then at US$3.95. First support lies at US$3.82--Monday's low--and then at US$3.80.

 

U.S. Department of Agriculture on Monday said the spring wheat harvest is 82% done, versus 69% a week ago, and 57% cut a year ago. The five-year average is 53% harvested.

 

The DTN Meteorlogix Weather Service forecast said episodes of scattered showers and thundershowers will continue to replenish soil moisture for the next winter wheat crop in the U.S. southern plains during the week. This is especially likely from northern Oklahoma and the Texas Panhandle northward.

 

Meanwhile, in the northern plains there is a chance for thundershowers during the next few days, mainly in North Dakota and in northern Minnesota. There are no significant concerns for the on going harvest of drought reduced spring wheat crops, Meteorlogix reports.

 

In Argentine wheat areas a slow moving disturbance may bring rain to the region during the coming weekend. The best chance for rain will be in the northern and eastern wheat belt, Meteorlogix said in the forecast.

 

In global wheat news, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 101,000 metric tonnes of wheat in a tender to be concluded Thursday, an agriculture ministry official said Tuesday. The tender is for U.S., Canadian and Australian wheat.

 

Contracts for the export of grain harvested this year concluded at Ukraine's agrarian exchanges, totaled 1.97 million metric tonnes to August 18, APK-Inform market analyst reported Tuesday, quoting the agrarian exchanges' union. The total figure included 987,000 tonnes of feed barley, 669,400 tonnes of milling wheat and 222,200 tonnes of feed wheat.