Bullish news needed for wheat market, analyst says
Wheat will need a steady flow of bullish supply news to hold its uptrend.
Overnight, European milling wheat futures were down 0.36%. Chicago wheat open interest as of October 21 was up 4,143 contracts. Algeria bought nearly 700,000 tonnes of milling wheat at their tender. Turkey seeks 175,000 tonnes.
The USDA Foreign Agriculture Service sees Australia production this year near 28 million tonnes, up from 15.2 million last year. Exports may jump to 18.5 million tonnes from 9.5 million last year. There are some short-term concerns about too much rain. There is also rain in the six- to 10-day forecast for the U.S. Plains, and this along with a key reversal for December Kansas City wheat might be a sign of a near-term peak.
Technical indicators are extremely overbought. December wheat closed lower on Wednesday, with an inside trading day. Dry conditions in the U.S. and Russia plus expectations for a lower production from Argentina have lent support.
Traders now see Argentina’s wheat production under 18 million tonnes, down from the October USDA estimate of 19 million and the September estimate of 19.5 million.
Wheat futures remain in a steep uptrend and rallied to the highest level since December 2014 on weather concerns and active tenders from key world importers. Dry conditions across the Northern Hemisphere remain a risk for newly planted crops, which need to establish before winter dormancy.
For the weekly export sales report, traders see wheat sales of 200,000 to 800,000 tonnes.
With the extremely overbought condition, it will take a steady flow of bullish news to hold the market in an uptrend. Selling resistance for December Kansas City wheat comes in at $5.74 per bushel, with $5.51 and $5.44 as initial support. Look for a setback with $5.37 as initial target. December wheat resistance is at $6.34, with support at $6.12 and $6.06.
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