July 30, 2008

 

US Wheat Outlook on Wednesday: Lower on overnight losses, lack of news

 

 

U.S. wheat futures are expected to open lower Wednesday on overnight losses and outside pressure, as the market looks for direction amid a lack of fundamental news, traders said.

 

Chicago Board of Trade wheat is called 3 to 5 cents lower. In overnight trading, CBOT September wheat was down 6 cents to US$7.86 per bushel and December wheat was down 5 1/2 cents to US$8.11.

 

Traders and analysts said the market has had little news to digest, and volume has been light this week. Wednesday could be choppy, a trader said.

 

"I'm not looking for a real big trade," he said.

 

"After failing to break through overhead resistance on Monday, the market tested the downside and held yesterday, giving little sense of direction to traders," Farm Futures said in a morning commentary.

 

Outside markets, including a stronger dollar and weaker crude oil prices, could influence the market, traders and analysts said.

 

Analysts say that while world demand for wheat remains strong, so does the competition for exports. Egypt has purchased 200,000 metric tonnes of Ukrainian or Russian wheat, and Iraq has purchased 100,000 metric tonnes of Russian wheat, analysts note. The failure of the U.S. to win more export business is bearish for the market, some analysts said.

 

Crop scouts on the first day of the 2008 Hard Spring Wheat & Durum Tour Tuesday found good-looking wheat in eastern North Dakota, but conditions deteriorated as participants traveled west.

 

The variable crop conditions were largely expected by participants on the tour, as eastern areas of the state have received more moisture than western areas, scouts said. Hard red spring wheat is used to make bread, while durum is used to make pasta.

 

Traders said reports of good crops in the eastern part of the state and troubled crops in the west were not a surprise and would not be a major factor in the market.

 

DTN Meteorlogix calls for mostly dry conditions for spring wheat through Saturday, with scattered showers and thunderstorms in eastern areas of the northern plains on Sunday. Hot temperatures and less rain will increase stress on spring wheat through the western belt, while mainly favorable growing conditions are seen in eastern areas.

 

Recent rainfall in western Australia is good for the crop there and adds some pressure to the market, traders said.

 

The next downside price objective is pushing and closing December prices below solid technical support at last week's low of US$7.98. The next upside price objective is to push and close December futures prices above solid technical resistance at this week's high of US$8.55 a bushel.

 

First resistance is seen at Tuesday's high of US$8.24 and then at US$8.40. First support lies at Tuesday's low of US$8.02 and then at US$7.98.
   

Video >

Follow Us

FacebookTwitterLinkedIn