January 21, 2009

U.S. wheat futures are poised to start stronger Wednesday in a bounce from losses Tuesday, with traders waiting to see the results of an Egyptian tender.

 

Chicago Board of Trade March wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT March wheat jumped 4 3/4 cents to US$5.54 3/4.

 

The markets could see a small recovery at the opening after CBOT March wheat closed at a five-week low Tuesday, analysts said. However, demand remains bearish as export interest is thin, they said.

 

"It's still a buyers market," Country Hedging said in a market comment.

 

The U.S. continues to face competition for export business from the Black Sea region, including Russia. The markets are waiting for the results of a tender from Egypt's state-owned General Authority for Supply Commodities to see how competitive U.S. soft red winter wheat is on the world market, a trader said.

 

GASC, a major buyer on the world market, said it was tendering for at least 55,000 to 60,000 metric tonnes of wheat for shipment Feb. 11-20 on a free-on-board basis. Current FOB values favor supplies from the Black Sea, AgResource Company said in a market comment.

 

"It is expected that Black Sea/Russian purchases by Egypt will continue," the firm said. "The stabilization of global wheat values, however, lends supportive analysis. ARC finds no reason why US SRW should fall [to] levels below those in the Black Sea."

 

Jordan, meanwhile, said it bought 100,000 metric tonnes of Ukrainian wheat in a tender. Of the total, 50,000 tonnes are for shipment during the first half of May and 50,000 tonnes for shipment during the second half of May, an official said.

 

Russia exported 12.165 million metric tonnes of grain, including 10.678 million tonnes of wheat, from the beginning of the marketing year on July 1 and Jan. 10, according to the Agriculture Ministry. The grain exports are about double the amount exported in the corresponding period in the previous marketing year.

 

The next downside price objective for the bears is pushing and closing CBOT March wheat below major psychological support at US$5.00, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.90, he said.

 

First resistance is seen at US$5.60 and then at US$5.75. First support lies at Tuesday's low of US$5.48 1/4 and then at US$5.25.

 

Looking at the weather, colder weather returns to hard red winter wheat areas of the U.S. Plains for the weekend, but it does not look cold enough to harm crops, DTN Meteorlogix said. Some precipitation is possible next week but mainly in northern and eastern areas, the private weather firm said. Rain is most needed in the west and south.