November 18, 2008
US Wheat Outlook on Tuesday: Down 4-6 cents on overnight losses, technical selling
U.S. wheat futures are poised to follow overnight losses with a weaker opening Tuesday as the market struggles to regain last week's momentum and overcome continued pressure from the global financial crisis.
Wheat is called 4 to 6 cents lower. In overnight trading, December Chicago Board of Trade wheat was down 7 cents to US$5.26 3/4 per bushel and March wheat was down 5 3/4 cents to US$5.48 1/4.
"Wheat could struggle to regain last week's bullish form, losing more ground overnight following heavy losses on Monday," Farm Futures Senior Editor Bryce Knorr said in a morning commentary. "Little fundamental news appeared to sway the trade, with selling more technical in nature."
The trade will continue to keep its eyes on outside markets, particularly U.S. stocks, which have again neared their lows due to the current financial crisis, trader said.
The winter wheat crop continues to progress well, according to the U.S. Department of Agriculture's crop progress report Monday.
The USDA said 66% of the winter wheat crop was rated good to excellent, down from 68% last week but above the 45% from the same time last year.
The USDA said 88% of the U.S. winter wheat crop had emerged, up from 83% last week and in line with the average of 88%. Winter wheat plantings were 96% complete, slightly below trade estimates. Plantings were up from 94% last week and in line with the 96% average.
Wheat prices have fallen to levels "we find compelling," Dennis Gartman wrote in the morning edition of The Gartman Letter.
"The wheat/corn spread (nearby futures) was out to US$6/bushel earlier this year, and it has fallen relentlessly since, falling to US$1.50/bushel... a level that tends to favor wheat feeding for livestock, especially given the better protein levels in wheat compared to corn," Gartman said.
That spread shrunk on Monday, with wheat falling 20 cents while corn climbed more than 5 cents in speculative spread trading, traders said.
The next downside price objective for the bears is pushing and closing prices below solid technical support at the October low of US$4.96 1/2, a technical analyst said. The next upside price objective is to push and close December futures prices above solid technical resistance at the November high of US$5.87 3/4 a bushel.
First resistance is seen at US$5.50 and then at last week's high of US$5.68 1/2, the technical analyst said. First support lies at Monday's low of US$5.25 1/2 and then at last week's low of US$5.05 1/4 and then at US$5.00.
In export news, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 91,000 metric tonnes of U.S. wheat in a tender to be concluded Thursday, an agriculture ministry official said Tuesday.