U.S. wheat futures are expected to start stronger Tuesday as gains in the corn market and weakness in the U.S. dollar support prices.
Traders predict soft red winter wheat for September delivery, the most actively traded contract, will open 3 cents to 5 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 4 cents, or 0.6%, to $6.92 1/2 a bushel.
Strength in the corn market is helping lift wheat because both grains are used for livestock feed, traders said. Weakness in the U.S. dollar adds support to prices, as it makes U.S. grains more attractive to foreign buyers, they noted.
"The weakening dollar is a positive development for U.S. wheat exports and that is providing some support for the market on Tuesday," wrote analysts at Doane Advisory Services, an agricultural advisory firm in St. Louis.
Yet, demand remains a concern for wheat because of increased competition for business from Russia, which resumed grain exports this month after banning them for nearly a year due to a devastating drought. Egypt, typically the world's top wheat importer, on Tuesday bought 120,000 tons of Russian wheat in a tender, snubbing the U.S.
Indeed, lackluster foreign demand should keep a lid on gains, traders said. Japan, a routine buyer of U.S. wheat, won't issue a tender to import food-grade wheat this week as it has already purchased almost 400,000 metric tons for September shipment, a senior government official said Tuesday.