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Wheat may follow other grains lower as sellers are active
Sovecon has raised its forecast for Russian wheat production to 90.9 million tonnes from 89.2 million previously, as yield is better than expected. September wheat closed higher on Wednesday but well off the early highs. Egypt is in private talks with 15 companies to import wheat. Bangladesh bought close to 50,000 tonnes in their tender, and the market found support from uncertainty on the Ukraine situation and on talk that the market is oversold. Pakistan is in the market for 200,000 tonnes, and there is talk that they will buy 300,000.
The prospects for Ukrainian grain exports continues to see setbacks with Russia intensifying its fight over certain regions. Russian President Vladimir Putin told his Turkish counterpart on Wednesday that not all issues have been resolved yet but progress had been made in the negotiations. Wheat prices rose to a one-week high amid lingering fears that the Ukraine will still have difficulties getting grain out of the country.
EU soft-wheat exports during the season that began July 1 reached 364,000 tonnes as of July 10, compared with 294,000 in a similar period a year earlier. Waves of colder temperatures and limited showers have had a significantly negative impact on winter wheat establishment in southern Argentina this season, and the window for planting has largely closed. Dry conditions continue this week as temperatures increase, stressing the dry areas. Scattered showers are forecast to occur with a system next week and this may help ease fears of major crop issues.
MARKET IDEAS
September wheat close-in support is at 804 3/4 and 795 1/2 and a push below those levels would leave 736 and 726 as the next downside support. A push under 849 3/4 for September Kansas City wheat would leave 790 1/2 as next downside target.
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About the Author: Terry Roggensack, a founding principal of The Hightower Report, analyzes the livestock, grain and soft markets. Roggensack has over 30 years of experience in the commodity and financial futures industry. In the late 1980s, he briefly lived in London as acting director of a new London clearing firm. Prior to that, Roggensack was director of research at Stotler & Company.
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