Chicago Board of Trade December wheat is called to open 5 to 7 cents lower. In overnight electronic trading, CBOT December wheat dropped 3 1/2 cents to US$6.66 1/4.
A slide in crude oil is setting a bearish tone for the grains along with the firm dollar, a CBOT floor broker said. A strong dollar is bearish for wheat because it gives foreign importers less buying power.
"The dollar's screaming," a CBOT broker said.
Statistics Canada, meanwhile, raised its wheat production estimate to 27.266 million metric tonnes, up from its August estimate of 25.425 million. The projection is bearish for the markets, as it is above the highest estimate in a pre-report survey of analysts, a trader said.
The increase in Statistics Canada's crop estimate comes on the heels of an increase in the U.S. Department of Agriculture's spring wheat production estimate. The USDA this week surprised traders by hiking its spring wheat forecast 46 million bushels to 547 million bushels.
Canada may become an aggressive exporter once it harvests its crop, much like the Black Sea region has been, a trader said. Competition for export business is tough as the world is expected to produce a record world crop due to expanded seedings and mostly favorable growing weather, an analyst said.
"There's a lot of wheat to go around," a trader said.
U.S. wheat export demand remains solid but isn't strong enough to spark a rally, an analyst said. Total weekly export sales of 671,900 were above trade estimates of 300,000 to 500,000 tonnes.
Weekly wheat sales for delivery in 2008-09 were 651,900 tonnes, up 42% from the prior four-week average, the USDA said. Nigeria bought 152,400 tonnes for delivery this marketing year, while 117,500 tonnes were sold to unknown destinations.
Looking at the weather, there is a chance for rain in the Australian states of Victoria and New South Wales on Friday and Saturday, DTN Meteorlogix said. Colder weather behind the front bears watching, the private weather firm said.
Argentina could see a few showers develop Friday, which would help wheat recover from the very dry autumn and winter. Cold temperatures later this weekend will be watched as the crop is in the jointing to reproductive stages of development.
The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$6.50, a technical analyst said. The bulls' next upside price objective is to push and close December futures prices above major psychological resistance at US$7.00, he said.
First resistance is expected to be at Wednesday's high of US$6.90 1/4 and then at US$7.00. First support lies at this week's low of US$6.62 1/2 and then at US$6.50.
