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US Wheat Outlook: Seen Lower On Larger Supplies, Setback10 days ago
CHICAGO (Dow Jones)--U.S. wheat futures on Tuesday are expected to pull back from Monday's rally after government crop data reminded traders of large supplies.
Chicago Board of Trade December wheat is called to open 3 to 6 cents per bushel lower. In overnight electronic trading, CBOT December wheat fell 4 1/4 cents to $5.15 3/4.
The U.S. Department of Agriculture reinforced bearish fundamentals for the wheat markets by raising its estimates for 2009-10 U.S. and world carryout, traders said. It was already known that global supplies were large.
The USDA estimated U.S. wheat carryout at 885 million bushels, above the average analyst estimate of 869 million and the USDA's October estimate of 864 million. World wheat carryout was pegged at 188.3 million tons, up from the USDA's October estimate of 186.7 million tons.
"Big gets bigger on disappointing demand," said Mike Zuzolo, president of Global Commodity Analytics & Consulting. "The wheat continues to be the leader to the downside."
Neighboring CBOT corn is called to open steady-higher after the USDA reports, while soybeans are expected to open lower. Weakness in the soybeans could drag down the grains after soy production and carryout estimates exceeded estimates, traders said.
The United Nation's Food and Agriculture Organization pegged world 2009-10 wheat production at 678 million metric tons, up 23 million tons from its July estimate. Better-than-expected production in Asia, North Africa and parts of Europe helped prompt the increase.
The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at last week's low of $4.87 3/4, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at $5.40, he said.
First resistance is seen at Monday's high of $5.24 1/4 and then at last week's high of $5.28 1/4, the technical analyst said. First support lies at $5.10 and then at $5.00, he said.
Traders are looking ahead to the 2010-11 U.S. wheat crop amid expectations that acreage will drop due to soft red winter wheat planting delays and weak prices. Planting was delayed as wetness slowed corn and soy harvesting, as many producers seed SRW wheat after soybeans in the Midwest and South.
U.S. winter wheat planting was 86% complete as of Sunday, up from 79% last week but below the average of 93%, the USDA said Monday in a weekly crop progress report. The crop was 71% emerged, up from 64% last week and below the average of 82%, the USDA said.
In export news, Jordan has issued a new tender to buy 100,000 metric tons of wheat. Japan said it won't hold its regular wheat tender Tuesday due to holidays on Wednesday in the U.S. and Canada.
-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=QfH2r6Cl9SvBxovETZx1rA%3D%3D. You can use this link on the day this article is published and the following day.
By Tom Polansek
Of DOW JONES NEWSWIRES
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