October 28, 2009

 

US Wheat Outlook on Tuesday: Down 2-3 cents; overnight losses, outside markets

 

 

Chicago Board of Trade wheat futures are expected to open weaker Tuesday following overnight losses as the market continues to correct following recent gains.

 

Chicago Board of Trade wheat is called 2 cents to 3 cents lower. In overnight trade, CBOT December wheat was down 3 1/2 cents to US$5.23 1/2 per bushel and March wheat was down 4 1/4 cents to US$5.42.

 

The market's recent climb has had little fundamental support behind it, and its retreat is also based on other factors, traders said.

 

"We're going to see some additional correction I think, as we go forward into midweek," said Shawn McCambridge, senior grains analyst with Prudential Bache.

 

Despite a weak close Friday and sharp losses Monday, McCambridge said the market has not yet done much technical damage, "mainly because the rally was so strong." He said the market is still 20 to 25 cents above key support levels.

 

Traders said the market could get some light pressure from outside markets, including a stable dollar.

 

The next downside price objective for the bears is pushing and closing December prices below solid technical support at US$4.95 1/2, a technical analyst said. Bulls' next upside price objective is to push and close December futures prices above solid technical resistance at last week's high of US$5.74 3/4 a bushel.

 

First resistance is seen at US$5.40 and then at US$5.50, the technical analyst said. First support lies at Monday's low of US$5.26 and then at US$5.15.

 

There are some concerns about the slow pace of soft red winter wheat planting, although a trader said the same improved weather forecast that is expected to boost harvest progress for corn and soybeans should also prompt more wheat planting.

 

The U.S. Department of Agriculture said that 76% of the winter wheat crop was planted, up from 69% the prior week and down from the five-year average of 85%. The report was in line with analyst expectations.

 

But McCambridge said that less than half of the soft red wheat has been planted.

 

The USDA said 62% of the crop was rated good-to-excellent, in the first condition ratings of the season. Last year, 65% of the crop was rated good-to-excellent at the same point in the season.

 

In international news, India's wheat output in the 2009-10 crop year will likely be 82 million metric tonnes due to an increase in the area under the crop, the federal farm secretary said Tuesday.

 

India is estimated to have harvested a record 80.58 million tonnes of wheat in 2008-09, according to government data.

 

Also, Japan's Ministry of Agriculture, Forestry and Fisheries won't issue its wheat tender this week, said an agriculture ministry official, declining to give reasons.

 

The tender will likely resume next Tuesday, said the official, who didn't want to be named.