By Andrew Johnson Jr.
Of DOW JONES NEWSWIRES
CHICAGO (Dow Jones)–U.S. wheat futures are poised for a weaker start to
Tuesday’s day session, consolidating recent gains on favorable crop ratings and
a lack of fresh supportive news.
In overnight electronic trading, Chicago Board of Trade September wheat was
1 3/4 cents lower at $5.34, and CBOT December wheat was 1 1/2 cents lower at
$5.62 3/4.
The market extended Monday’s losses overnight, as near-record-high spring
wheat crop ratings, solid winter wheat harvest progress and the absence of new
weather threats to global wheat output takes the edge off prices.
The market is seemingly taking a breather from the sharp rally of the past
two weeks, as the lack of new news to feed bullish appetites encourages traders
to cover some previously established long positions, a CBOT floor analyst said.
Weather forecasts adding some light to moderate precipitation across parts
of central and northern Kazakhstan, and cooler weather conditions in northern
Europe dampening worries of damage to European Union’s wheat crop, are expected
to add pressure to prices.
Meanwhile, the question still posed by the market revolves around new fund
money being put to work in the market, which remains uncertain as it was not
apparent Monday, AgResource Company said in a market note.
A market technician said that prices are still in a steep four-week-old
uptrend on the daily bar chart and that market bulls still have upside
technical momentum.
The next upside price objective for December CBOT wheat is to push and close
prices above major psychological resistance at $6.00 a bushel. The next
downside price objective is pushing and closing prices below solid technical
support at $5.35.
The U.S. Department of Agriculture reported Monday that spring wheat
conditions remained strong. It said 83% of the crop was in good to excellent
condition, unchanged from the prior week. The rating was 71% a year ago.
The absence of any weather threat to the crop and strong crop ratings
continue to point to good production potential, analysts said.
Meanwhile, the winter wheat crop is 63% harvested, according to the USDA, up
from 54% the prior week, but below the average of 65%. The harvest has been
delayed at times by wet weather in the southern Plains.
The harvest is moving at an average pace and with decent weather, analysts
expect good progress to be accomplished again this week.