September 1, 2009

 

US Wheat Outlook on Tuesday: Lower; overnight losses; corn, soy weigh

 

 

U.S. wheat futures are expected to open lower Tuesday following overnight losses and pressure from neighboring markets.

 

Benchmark Chicago Board of Trade wheat is called 2 to 4 cents lower. In overnight trade September CBOT wheat was down 3 3/4 cents to US$4.67 1/4 per bushel and December wheat was down 2 3/4 cents to US$4.96.

 

Outside markets weighed on wheat and other commodities overnight, but those markets appear mixed Tuesday morning, traders said. Weaker opens are expected for corn and soybeans, however, which could pressure wheat.

 

The market had rebounded Monday from early losses, with both the CBOT and Kansas City Board of Trade markets ending higher. But that was due mostly to short-covering as the market was considered oversold, traders and analysts said.

 

"Funds are already awfully short on the wheat," said Jason Britt, president of Central State Commodities. "Sometimes you turn around and say 'who's going to sell this thing?'"

 

Fundamentally there is little to spur the market higher, traders said. A trader noted that a warming trend in the Canadian plains should help harvest progress, which is weighing on the Minneapolis Grain Exchange market in particular.

 

USDA said in its crop progress report Monday that 75% of U.S. spring wheat crop is in good-to-excellent shape, up 3 percentage points from last week. The climb was unusual for this time of year, and above trader expectations of a steady to 2 percentage point decline in ratings.

 

The crop was 38% harvested, down from 78% last year and the average of 79%.

 

"A mostly dry weekend in North Dakota helped advance harvest but farmers continue to be hampered by short days and high moisture content of the crop," Benson Quinn Commodities analyst Kevin R. Kjorsvik said in a market commentary.

 

Deliveries were heavy again, with 3,911 reported against the September CBOT future contract Tuesday.

 

The next downside price objective for the bears is pushing and closing December prices below solid technical support at US$4.50. The next upside price objective is to push and close December futures prices above solid technical resistance at the July low of US$5.32 3/4 a bushel.

 

First resistance is seen at Monday's high of US$5.02 and then at last week's high of US$5.16 1/2. First support lies at Monday's contract low of US$4.80 3/4 and then at US$4.75.

 

In export news, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 127,000 metric tonnes of wheat in a tender to be concluded Thursday, an agriculture ministry official said Tuesday.

 

In other news, global wheat prices could rally if weather risks in Australia and other major producing countries are realized, reducing expected global production, Australian marketing and logistics concern GrainCorp Ltd. (GNC.AU) reported Tuesday.