November 26, 2008
US Wheat Outlook on Wednesday: Seen mixed in choppy pre-holiday trade
U.S. wheat futures are called to start Wednesday's day session mixed, with traders expected to even up positions ahead of Thanksgiving and first notice day for December contract months.
In overnight electronic trading, nearby Chicago Board of Trade December wheat rose 3 cents to US$5.37 per bushel. CBOT March wheat edged up 1 1/2 cents to US$5.54 1/4.
There is a lack of fresh news out for the markets, traders said. Activity will likely be choppy ahead of the Thanksgiving holiday Thursday, as some participants are stepping back from the markets, an analyst said.
"We posted a quiet session yesterday and we could be in for more of the same today," FuturesTechs said in a market comment. "Why rock the boat ahead of Thanksgiving?"
First notice day for the December futures is Friday, which means it's the first day on which notices of intention to deliver actual commodities against futures-market positions can be received. Traders will continue to roll positions into March from December ahead of first notice day, a CBOT floor trader said.
Outside markets, which have been providing leadership to the grains lately, were giving off "mixed signals" ahead of the opening, a trader said. Crude oil was higher, which should help underpin wheat. However, the U.S. dollar was also higher, which is seen as bearish because it gives foreign countries less buying power to import commodities.
"It's kind of like, 'Which one are you going to follow?'" a trader said about the dueling influences of the dollar and crude oil.
There continues to be supportive market chatter that rains at harvest time in Australia could lower the quality of the wheat crop. Cutting in Australia's northern New South Wales state resumed after widespread heavy rainfall had stopped work, industry sources said Wednesday.
But private weather firm DTN Meteorlogix said rain and thunderstorms appear likely for Australia's eastern crop belt during the next few days. Heavy storms are possible.
"This will further delay the already delayed wheat harvest and it will also increase the risk for disease," Meteorlogix said.
In the U.S., precipitation in the eastern and southern Midwest favors wheat development, Meteorlogix said. Soil moisture and temperatures favor pre-winter growth of wheat in the central and southern Plains, except that it may be too dry through parts of Texas. There is a chance of some shower activity in Texas during the next few days, the weather firm said.
Winter crop planting is progressing well in India, the agriculture minister said. The government probably won't import any wheat and rice this year, he said.