December 16, 2003
US Wheat Outlook On Tuesday: Steady-Down 1 cent; Looking For Support
U.S. wheat futures are seen starting the session with a steady to easier feel, as long position holders continue to liquidate trades amid an absence of fresh supportive news.
Improved moisture conditions in the hard red winter wheat belt is expected to aide winter wheat crops and with the lack of any confirmed fresh export demand, buyers have been provided with few reasons to enter the market, traders said. On Monday, speculative commodity funds were estimated sellers of 3,000 Chicago Board of Trade wheat contracts.
However, Monday's midrange close, and talk that the session's sizable declines did not produce heavy volume was seen as mildly supportive, potentially leading to two-sided action. Underlying strength in the $3.86- $3.84 area basis CBOT and Kansas City Board of Trade Mar wheat is seen providing support to the markets amid ideas recent declines are nearing overdone levels, sources added.
Nevertheless, the market needs fresh inputs to rekindle enthusiasm, as participants begin to position themselves ahead of the holiday doldrums.
Morocco's state grain agency ONICL issued a buying tender for 110,000 metric tons of soft wheat on a cost and freight basis, the agency said in a statement Tuesday. The tender will be held on Jan. 5, 2004, for January and February delivery.
The Korea Feed Association, or KFA, decided to buy 25,000 tons of optional origin feed-grade wheat Tuesday from Cargill Inc. according to a Seoul-based trader familiar with the deal.
Meanwhile, the European Union, one of the world's largest soft wheat exporters, is on the verge of importing more than it exports for the first time since its post-World War II agricultural recovery. The French state grains board, Office National Interprofessionnel des Cereales, or ONIC, last week revised its estimates of E.U. soft wheat trade to show that just 100,000 tons stands between the E.U.'s current status as a net exporter and its potential status as a net importer.
Lingering talk that China is ready to buy at least one million tons of wheat from the U.S. in the 2004 calendar year to replenish government stocks, satisfy millers' needs and to narrow the huge trade surplus with the U.S. continues to circulate through world markets, industry sources in Beijing said Tuesday.
However, until confirmation of such business occurs, traders have begun to take the speculation with a grain of salt, analysts said.
In the hard red winter wheat belt, strong, gusty winds blew a weak storm system eastward Monday. Some light precipitation accompanied the storm and associated frontal boundaries, but amounts were insignificant. Sunny skies will dominate Tuesday with temperatures showing a strong warming trend through the rest of the week hitting 50s Fahrenheit over much of the belt by Friday afternoon. The next significant moisture is not expected until next week with some scattered light rain or snow developing over parts of Kansas into Oklahoma and northwestern Texas, Global Weather Services said.