December 15, 2009

US Wheat Outlook on Tuesday: Lower on dollar; following corn, soy

U.S. wheat futures are expected to open lower Tuesday, following other markets in the absence of its own supportive fundamental news.

Chicago Board of Trade wheat is called 3 cents to 5 cents lower. In overnight trade, March CBOT wheat was down 5 cents to US$5.38 1/2 per bushel and July CBOT wheat was down 5 1/4 cents to US$5.61 1/2.

Wheat currently "is a follower," traders said. The market followed corn and soybeans higher on Monday and could follow those markets lower on Tuesday, traders and analysts said.

A stronger dollar is expected to set the tone for the grains and oilseeds in what could be a "turnaround Tuesday," traders said.

There is little fundamental strength to the market, traders and analysts said, as demand remains weak. There are also few if any supply concerns, traders said.

"Temperatures this morning don't appear cold enough to be causing problems with winter wheat on the Central Plains, because most of the region enjoys at least some snow cover," Farm Futures analyst Arlan Suderman said in a morning commentary.

In export news, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 126,000 metric tonnes of wheat in a regular tender to be concluded Thursday, a ministry official said Tuesday. Of that total, 40,000 is to come from Australia, while the rest is from the U.S.

The next downside price objective for the bears is pushing and closing prices below solid technical support at the November low of US$5.07 1/2, a technical analyst said. Bulls' next upside price objective is to push and close March futures prices above solid technical resistance at US$5.70 a bushel.

First resistance is seen at Monday's high of US$5.48 and then at US$5.52. First support lies at last week's low of US$5.30 and then at US$5.25.