November 24, 2009

 

US Wheat Outlook on Tuesday: CBOT seen down 1-2 cents on heavy supplies

 

 

Wheat futures on the Chicago Board of Trade are expected to open 1-2 cents lower Tuesday as heavy supplies overhang the market.

 

In electronic trading, December wheat was down 1 cent to US$5.56 1/4 a bushel, and March futures were down 1 1/2 cents at US$5.77.

 

Strong wheat crops globally have led to abundant stocks, increasing competition for the U.S. grain.

 

"The fundamentals are still the same--an oversupply situation," said Dan Cekander, director of grain research for Newedge in Chicago. "That's something that doesn't go away."

 

At the end of the 2009-10 marketing year, U.S. wheat stockpiles will total 885 million bushels, the U.S. Department of Agriculture estimated in a report earlier this month.

 

That's up 35% from the previous year and more than double the ending stocks of 306 million bushels for 2007-08.

 

Analysts also see little bullish impetus from weather or potential crop problems in the primary U.S. wheat regions. Heavy rainfall in the Midwest has hampered emergence in soft red winter wheat states of the region.

 

U.S. winter wheat, for harvest next year, was 84% emerged as of Sunday, up from 77% the previous week but down from the five-year average for that period of 90%, the USDA said Monday.

 

Still, price downside for wheat futures probably will be limited for the time being because of the prospect that rallies in outside markets, such as gold or oil, may spur speculative fund buying in CBOT grains.

 

"Fear of fund flow--that's what keeps people from selling wheat hard," Cekander said.