September 14, 2009

 

US Wheat Outlook on Monday: 6-8 cents down on spillover pressure, supply

 

 

Pressure from other markets and bearishness about large global supplies are expected to weigh on U.S. wheat futures at the start of Monday's day session, traders said.

 

Chicago Board of Trade December wheat is called to open 6 to 8 cents per bushel higher. In overnight electronic trading, CBOT December wheat lost 8 1/4 cents to US$4.59.

 

Strength in the U.S. dollar and weaker crude oil prices are seen as bearish influences on the grains, traders said. A firm dollar makes U.S. wheat less attractive to foreign buyers. Neighboring CBOT corn and soybeans also were lower overnight.

 

Bearish fundamentals for wheat did not change after the U.S. Department of Agriculture issued September crop reports Friday, traders said. World wheat ending stocks look "huge," according to a note from Country Hedging.

 

The USDA on Friday raised its estimate for world wheat stocks for 2009-2010 to 186.61 million tonnes from its August estimate of 183.56 million. Export demand for U.S. wheat has been lackluster this marketing year because there is competition for business and the world is well-supplied with wheat, traders said.

 

Spring wheat in the U.S. northern Plains will benefit from mostly above-normal temperatures during the next seven days, according to private weather firm DTN Meteorlogix. Showers are possible, but they should be mostly light, causing only minor harvest delays, the firm said in a forecast.

 

The USDA is slated to issue its weekly crop progress report at 4 p.m. EDT, including an update on cutting. Harvest is advancing slower than normal this year after the crop was planted late in the spring.

 

In the central and southern U.S. Plains, episodes of scattered thunderstorms will help replenish soil moisture for early growth of hard red winter wheat, Meteorlogix said. Argentina, which has struggled with drought, will stay dry or see "only a few light showers through western and southern growing areas" during the next week, according to the firm.

 

In Australia, the next chance for showers in Queensland and New South Wales does not come until early next week, Meteorlogix said. There are worries El Nino could bring unfavorable dryness to Australia.

 

In other news, Egypt's agriculture minister decided to cut the price of wheat seeds by 50% in a bid to encourage farmers to cultivate wheat, according to local media. Egypt is a major buyer of wheat on the world market.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.25, a technical analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.02, he said.