August 25, 2009

 

US Wheat Outlook on Tuesday: Seen steady-to-weaker, watching soy, corn

 

 

U.S. wheat futures are poised to start steady to lower Tuesday as the markets' look toward neighboring influences for direction.

 

In overnight electronic trading, Chicago Board of Trade December wheat ended unchanged at UA$4.99 1/4 a bushel.

 

Wheat will keep an eye on CBOT soybeans and corn for leadership amid a lack of fresh fundamental news, a floor trader said. The neighboring markets are called to open slightly lower.

 

Overall, the fundamental storyline in wheat is well known, with world supplies considered large and the markets continuing to look for stronger export demand, a trader said. The U.S. Department of Agriculture on Monday trimmed its good-to-excellent rating for U.S. spring wheat to 72% from 74% last week, but the crop is still in good condition, traders said.

 

The spring wheat harvest was 22% complete as of Sunday, up from 13% last week but down from the average of 66%, according to the USDA. In North Dakota, the crop was 7% cut, compared to an average of 62%.

 

The delayed harvest progress was not surprising because the crop was planted late in the spring, a trader said. An early frost is not expected at this point, and producers can harvest the wheat quickly when it is ready, he said.

 

Conditions remain average to above in Australia's southeast, but yields from a harvest of wheat in coming months in northern New South Wales and Queensland will feel the effects of the warm conditions, according to logistics provider GrainCorp Ltd. Exportable surpluses will be reduced, it said, without issuing estimates. Still, the crop losses won't be enough to get futures markets worked up unless they amount to several million tonnes, a trader said.

 

Northern New South Wales and Queensland trend cooler during the next two days, according to private weather firm DTN Meteorlogix. The long-range charts suggest some chance for showers during the coming weekend, but they may tend to favor the southern part of the area, the firm said.

 

Argentina, which continues to struggle with drought, should stay mainly dry through Sunday, with a chance for a few light showers Monday, Meteorlogix said. Temperatures average well above normal, according to the firm.

 

In other news, Japan said is seeking 160,000 tonnes of wheat, including 97,000 tonnes from the U.S., in a routine tender to be concluded Thursday. The wheat is expected to arrive Oct. 16 to Nov. 15.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at UA$4.50, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the July low of UA$5.32 3/4, he said.