October 29, 2008
US Wheat Outlook on Wednesday: Up 7-10 cents on higher corn, outside strength
Chicago Board of Trade wheat futures are expected to open 7 to 10 cents a bushel higher Wednesday with higher calls in corn, a weak U.S. dollar and a widespread commodity rally providing support, traders said.
Bullish sentiment in commodities seems to be improving, with crude oil up 6%, gold up nearly 3% and copper more than 7% higher early Wednesday. Almost all commodities are higher or expected to open higher as the dollar falls.
The moves in wheat, however, are expected to be subdued, as the fundamentals of the crop off to a solid start and favorable weather will limit rally attempts, an analyst said.
"It's been low-volume trade, just kind of flopping around," a CBOT floor trader said of the price movement in wheat.
While prices are seen rising on the strength of the outside markets, wheat's upside potential is also limited since speculators hold a sizable net short position, he said.
The commodity markets also benefit from improved investor sentiment after the Dow Jones Industrial Average vaulted to its second-largest daily point gain ever Tuesday, and is seen steady to slightly higher at Wednesday's open.
Conditions on the central and southern Plains have been mostly dry in the last 24 hours, with near- to above-normal temperatures in extreme western areas and near to below normal elsewhere in the region, DTN Meteorlogix said.
The Plains are forecast to remain dry through Friday, as temperatures climb to above normal Wednesday and to well above normal by Thursday and Friday. The weekend is expected to be dry with only a few light showers developing on Monday, Meteorlogix said.
In export news, Egypt will tender Wednesday to buy 55,000 to 60,000 metric tonnes of wheat for Nov. 21-30 shipment, free on board. The tender is expected to be a mix of U.S. hard red winter, U.S. soft red, U.S. soft white, Argentine wheat, Kazakh wheat or Canadian soft wheat, an official with Egypt's state-owned General Authority for Supply Commodities said.
Wheat planting in Brazil is nearly complete, with 2008-09 production estimated at 4.6 million metric tonnes, the agricultural attache in Brazil said. Although the Brazilian government has said it wants to double wheat production by 2012 by increasing the minimum price and raising individual credit limits to producers, many are skeptical this goal can be met because liquidity in the wheat sector is lower than it is for corn and soybeans and land use in southern Brazil is largely fixed.