September 10, 2008
US Wheat Outlook on Wednesday: 2-4 cents up in rebound, waiting for Egypt
U.S. wheat futures are seen starting Wednesday's day session slightly higher amid ideas the markets are due for a bounce, although trading could turn two-sided on spillover pressure and a lack of bullish news.
Traders are waiting to see the results of an Egyptian tender for wheat.
Chicago Board of Trade December wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT December wheat rose 2 1/2 cents to US$7.33.
The markets are "probably due for stability" after recent sell-offs, Country Hedging said in a market comment. CBOT December wheat has fallen nearly US$2 during the past three weeks amid bearishness about ample world supplies and technical selling.
Even if wheat rallied 50 cents, the longer-term technical trend would still look weak, a CBOT floor trader said. Bears have a "solid technical advantage and gained more power" Tuesday when CBOT December wheat hit a fresh 9 1/2-month low, a technical analyst said.
The next downside price objective for the bears is pushing and closing CBOT December wheat below psychological support at US$7.00, the analyst said. The bulls' next upside price objective is to push and close December futures prices above solid technical resistance at the August low of US$7.71.
First resistance is seen at Tuesday's high of US$7.44 3/4 and then at US$7.50. First support lies at Tuesday's low of US$7.19 and then at US$7.00.
Traders are waiting for the results of a tender from Egypt's state-owned General Authority for Supply Commodities. GASC said it was tendering to buy wheat for shipment Oct. 11-20 on a free-on-board basis.
Statistics Canada, meanwhile, pegged all-wheat stocks as of July 31 at 4.817 million tonnes, above trade estimates of 3.9 million to 4.2 million. Stocks are down from 6.8 million a year earlier, although the drop is "no big deal" because there it plenty of wheat around, a CBOT trader said.
"We've got plenty of wheat, especially in the U.S.," he said.
The world is expected to produce a record world crop in 2008-09 after farmers expanded plantings to take advantage of high prices. The U.S. Department of Agriculture will update its estimates on world wheat production and U.S. ending stocks in its September supply/demand report, due out at 8:30 a.m. EDT on Friday.
In the U.S. northern Plains, the spring wheat harvest should finish up by the end of the week, Country Hedging said. Drier and sometimes warmer weather will encourage cutting, DTN Meteorlogix said in a forecast.
In the U.S. central and southern Plains, scattered shower activity will help replenish soil moisture for winter wheat planting, Meteorlogix said. Rain is needed for the next winter wheat crop in the east Ukraine and south Russia, the private weather firm said.