September 25, 2007

 

US Wheat Outlook on Tuesday: Down 2-4 cents on lack of fresh, bullish news

 

 

Profit-taking and a lack of fresh, bullish news should press U.S. wheat futures 2 to 4 cents per bushel lower at the start of Tuesday's day session, traders said.

 

In e-CBOT overnight trading, Chicago Board of Trade December wheat slipped 3 3/4 cents to US$8.74.

 

Demand for U.S. wheat continues to look strong, but there was no surprising export news out overnight, traders said. Concerns about crop losses in Australia due to drought also appear to be factored into the markets, creating a "ho hum" feeling in the trade, a CBOT floor broker said.

 

State-run Trading Corporation of Pakistan is seeking 100,000 metric tonnes of wheat in a tender to be concluded on Oct. 8. Pakistan's government had earlier announced plans to import up to 1 million tonnes wheat over the next several months to tide over a shortfall in domestic supply.

 

The Turkish government has mandated the state-owned grain board to import 800,000 metric tonnes of wheat by the end of May 2008, without any customs taxes, according to a report. Unfavorable weather conditions, especially drought, hit Turkey's wheat crop this year.

 

"There are a lot of big tenders lingering in the market," a CBOT floor trader said.

 

China said it will auction 200,000 metric tonnes of wheat from its state reserves on Oct. 12. The wheat, which was imported for state reserves, will be sold in six provinces and Dalian city.

 

There are questions about the quality of the wheat, so the auction isn't expected to impact the world export market, a trader said.

 

Australia's crop continues to suffer from dryness, although fears about poor production aren't seen as surprising anymore, traders said. Southeast Australia has a chance for light showers Tuesday or Wednesday, but conditions will otherwise be mostly dry during the next seven to eight days, DTN Meteorlogix said.

 

In the U.S. central and southern Plains, showers favor early growth of winter wheat while causing only minor planting delays, Meteorlogix said. Wheat in the southwest could still use more rain, the weather firm said.

 

The U.S. Department of Agriculture reported Monday afternoon that 27% of the U.S. winter wheat crop was planted as of Sept. 23, below the 32% seeded last year and the five-year average of 35%. In Kansas, the largest U.S. wheat producing state, 17% of the wheat had been planted, compared to the average of 26%.

 

It appears that there will be more acres planted to wheat this fall so planting progress will be below the average, an analyst said. The delays are not much of a worry because producers can catch up quickly on planting when they need to, another analyst said.

 

The bulls' next upside price objective is to push and close prices above solid resistance at the contract high of US$9.07, a technical analyst said. The next downside price objective for the bears is closing prices below support at US$8.39. First resistance is seen at Monday's high of US$8.91 and then at US$9.00.

 

At the Kansas City Board of Trade, bulls' next upside price objective is closing prices above solid resistance at Monday's and the contract high of US$8.80, the analyst said. The bears' next downside objective is closing prices below solid support at last week's low of US$8.18 3/4. First resistance is seen at Monday's high of US$8.80 and then at US$9.00. First support is seen at Monday's low of US$8.58 and then at US$8.50.