September 23, 2009

 

US Wheat Outlook Wednesday: Down 1-2 cents; lacks fresh supportive news

 

 

U.S. wheat futures are expected to start Wednesday's day session on the defensive, pressured by a lack of fresh supportive news and spillover weakness from corn and soybeans.

 

In overnight electronic trading, Chicago Board of Trade December wheat was 1 3/4 cents lower at US$4.54 1/2, and CBOT March wheat was 1/2 cent lower at US$4.75.

 

A quiet news front, ample global wheat supplies and only routine export demand continue to keep futures grinding along in search of clear direction, analysts said.

 

Abundant world supplies remain the key factor anchoring wheat futures, and without the presence of strong export demand, buyers have little incentive to aggressively push prices higher, analysts said.

 

Traders are optimistic a near-term bottom may be in place, with harvest pressure subsiding and prices holding in a sideways pattern on technical charts recently. However, the penetration of solid underlying chart support near the US$4.50 area basis CBOT Dec wheat opens the door for another leg down in prices, a CBOT floor analyst said.

 

Otherwise, the market will eye movements in corn and soybeans, with outside markets applying mild pressure to prices.

 

A market technician said the next downside price objective for Dec wheat is pushing and closing prices below solid technical support at US$4.25. The next upside price objective is to push and close Dec futures prices above solid technical resistance at US$5.00 a bushel.

 

First resistance is seen at Tuesday's high of US$4.64 1/2 and then at US$4.75. First support lies at the contract low of US$4.50 and then at US$4.40.

 

In other news, Russia exported 2.751 million metric tonnes of wheat in July and August, the first two months of the 2009-2010 marketing year, compared with 2.903 million tonnes in July and August 2008, the Federal Customs Service said Wednesday. Wheat exports in August totaled 1.879 million tonnes, down 14% on the year.

 

South Africa's 2009 wheat second production forecast is 2.01 million metric tonnes, up 20,380 tonnes, or 1.02%, from the previous estimate of 1.99 million tonnes, the Crop Estimates Committee said Wednesday. The planted area was revised upward slightly to 657,500 hectares from the previous month's 656,200 hectares.

 

The DTN Meteorlogix Weather Service forecast said maturing crops and crop harvests in the northern plains will benefit from mostly above normal temperatures and little rainfall during the next five days. The weather next week may turn wetter and eventually colder, but this is somewhat uncertain.