December 24, 2008
US Wheat Outlook on Wednesday: Mixed as neighboring, outside markets lead
U.S. wheat futures are called mixed in the expectation they will follow nearby and outside markets in a thin Christmas Eve trade.
In overnight electronic trading, Chicago Board of Trade March wheat gained 1/2 cents to US$5.75 3/4. Kansas City March wheat 1/2 cents to US$5.93 1/2, and Minneapolis Grain Exchange wheat dropped 1 1/4 cents to US$6.33.
"Trading overnight was extremely thin and choppy, with generally mixed results," said Arlan Suderman, a Farm Futures market analyst. "Look for wheat to remain a follower, but it is probably most vulnerable to profit-taking selling if corn and soybeans turn lower. One of the keys will be to watch Kansas City wheat's ability to test major chart resistance at US$6."
A break in crude-oil prices pressured an overnight rally in grains and soy, which will continue to look for outside direction Wednesday, Suderman said.
Crude oil is down and the U.S. dollar is mostly flat Wednesday morning.
Nearby demand slackened as prices moved to monthly highs in the last few days, but wheat's need to maintain acreage in spring plantings will prevent it from slipping too far out of line if corn and soybean prices continue to move higher, Suderman added.
While bears maintain "the overall near-term technical advantage, the bulls have gained momentum" and hit a fresh five-week high in Tuesday's trade, a market technician said.
Wheat bears are aiming close below "solid technical support" at US$5.35," he said, marking first support at Tuesday's low of US$5.53, then at US$5.40.
With bear pushing to crack solid technical resistance at US$6 a bushel, the technician marked first resistance at Tuesday's high of US$5.81.
In the Corn Belt, frozen precipitation has changed to rain in the Ohio Valley, freezing rain and snow showers continue in the lower Great Lakes region and cold, dry weather is overspreading the western Corn Belt, said Mark Brusberg, an agricultural meteorologist at the U.S. Department of Agriculture.
During the next five days, precipitation could total as much as 1 to 2 inches from the Delta into the lower Great Lakes region, while little to no precipitation will fall across the Great Plains, Brusberg said.
Mostly dry conditions are speeding the harvest of Argentina's drought-stressed crop, which is ahead of last year's pace, said DTN Meteorologix.
In Australia, wet conditions continue to create an "unfavorable" environment for maturing wheat and "will likely delay the wheat harvest," the private weather firm said.
In global trading news, Trading Corp. of Pakistan, a state-run enterprise, concluded one of Asia's biggest wheat tenders in 2008, buying 590,000 metric tonnes of wheat from several trading houses, a Karachi-based senior shipping company executive said Wednesday.
The entire lot will be supplied in January at US$213.50/tonne, cost and freight basis, at the ports of Karachi, Qasim or Gwader. Several of the bidders had offered prices higher than US$213.50/tonne, which was the lowest bid originally offered by trading house Glencore, but the TCP persuaded other bidders to supply wheat at the same price.
Trading house Glencore will supply 120,000 tonnes of wheat, Agrocorp will supply 180,000 tonnes and ZAO Vitalimar 100,000 tonnes. Other suppliers are WJ Grain, which will bring in 50,000 tonnes of wheat, Exim 50,000 tonnes, Cargill 40,000 tonnes of wheat and Valars 50,000 tonnes of wheat.
Information on the origins of the wheat to be supplied by these trading houses wasn't immediately available.