September 29, 2009

 

US Wheat Outlook on Tuesday: Seen up, waiting for Egypt, crop reports

 

 

U.S. wheat futures are expected to start stronger Tuesday on follow-through buying, with the markets waiting for the results of an Egyptian tender and looking ahead to government crop reports.

 

Chicago Board of Trade December wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT December wheat was up 3 3/4 cents to US$4.59 1/2.

 

Wheat is continuing to recover from a sharp slide Friday that sent CBOT December wheat to a fresh contract low, a trader said. The contract does not show any chart resistance until US$4.69, according to AgResource Company.

 

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$5.00, he said.

 

First resistance is seen at Monday's high of US$4.62 and then at US$4.75, the analyst said. First support lies at the contract low of US$4.48 and then at US$4.40, he said.

 

Traders are waiting to see the results of a tender from Egypt's state-owned General Authority for Supply Commodities. Egypt, a major buyer on the world market, is known for being price-sensitive.

 

Egypt is expected to book Russian wheat in the tender and could potentially consider U.S. wheat, AgResource Company said. A cargo or two of U.S. soft red winter wheat could be sold off the U.S. east coast due to declining freight offers, according to the firm.

 

In other export news, Japan said it will not hold its weekly wheat tender but did not explain why. The tenders will resume next Tuesday, an official said.

 

On Wednesday, the U.S. Department of Agriculture is slated to issue a small grains report and quarterly stocks report. There could be some positioning Tuesday ahead of the release of the data, traders said.

 

Analysts generally expect the USDA to raise its estimate for 2009-10 U.S. wheat production from last month and to report that U.S. wheat stocks as of Sept. 1 were much higher than a year ago, according to a Dow Jones Newswires survey. Traders are eager to see whether the government confirms reports of high yields for U.S. spring wheat.

 

In North Dakota, the top U.S. spring wheat state, harvest was 91% complete as of Sunday, down from the average of 97%, according to the USDA. Late spring planting and cool summer weather are responsible for the late harvest.

 

The USDA said 36% of winter wheat was planted as of Sunday, down from 37% last year and the average of 39%. The crop was 13% emerged, compared to 12% last year and the average of 14%.

 

Periodic shower activity will favor germination and early growth of hard red winter wheat in the central and southern Plains, according to private weather firm DTN Meteorlogix. Intervals of drier and warmer conditions should allow for good planting progress in most areas, the firm said.