December 8, 2009

 

US Wheat Outlook on Tuesday: Seen steady to up, watching other markets

 

 

U.S. wheat futures are expected to start steady to 2 cents per bushel stronger Tuesday as the markets bounce from recent losses and take direction from neighboring Chicago Board of Trade corn, traders said.

 

In overnight electronic trading, CBOT March wheat slipped 3/4 cent to US$5.47 1/4. CBOT corn and soybeans were higher overnight.

 

Corn is finding support from firm soybeans and worries that wintry weather in the U.S. Midwest will impact late harvest activity, traders said. The U.S. Department of Agriculture on Monday estimated 12% of corn was unharvested as of Sunday. Soybeans, meanwhile, continue to feel support from robust export demand.

 

Strength in U.S. wheat would be a turnaround from recent losses in the markets, which have been pressured by fund selling and sluggish export demand. There are ideas wheat's losses were short-term overdone, although fundamental supply-and-demand factors aren't supportive to prices, a trader said.

 

CBOT March wheat is approaching a key area of technical support at its 50-day moving average of US$5.36, according to a note from Benson Quinn Commodities. Failure to hold at that level would suggest more downside potential to the November lows, about 20 to 25 cents lower, the firm said.

 

CBOT March wheat on Monday closed lower, near the session low and hit a fresh four-week low. A two-month-old uptrend on the daily bar chart "was negated Monday, and bears have fresh downside technical momentum," a technical said.

 

The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at the November low of US$5.07 1/2, he said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.80, he said.

 

First resistance is seen at US$5.52 and then at Monday's high of US$5.62 1/2. First support lies at Monday's low of US$5.47 1/2 and then at US$5.40.

 

In other news, the Australian Bureau of Agricultural and Resource Economics lowered its wheat production forecast to 22 million tonnes from a September estimate of 22.7 million tonnes. The reduction isn't a major deal, traders said, because there is still plenty of wheat to go around. The USDA in November pegged Australia's crop at 23.5 million tonnes.

 

The USDA, in its weekly crop progress report, said Monday that the U.S. winter wheat crop was 93% emerged as of Sunday, up from 89% the prior week. It estimated that 63% of the crop was rated good-to-excellent, unchanged from the previous week.

 

Japan said it is seeking 131,000 tonnes of wheat, including 91,000 tonnes from the U.S., in a routine tender to be concluded Thursday for delivery Jan. 16 to Feb. 15. Turkey's state grain board will hold an international export tender Dec. 17 to sell wheat, according to a report.