U.S. wheat outlook: Seen lower as weather forecasts improve
U.S. wheat futures are expected to start weaker Wednesday as long-range forecasts offer improved chances for badly needed rains in dry growing areas.
Traders predict soft red winter wheat for December delivery, the most actively traded contract, will start down 5 cents to 7 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract slid 6 3/4 cents, or 1%, to $6.51 1/2 a bushel.
Weighing on prices are hopes rain in October will benefit planting efforts in the southern U.S. Plains. The region, where farmers grow bread-making wheat, needs moisture after suffering from dryness for the past year.
"Rain potential does improve for the eastern third of the winter wheat belt from late next week into the 11-to-15 day period," meteorologists at Commodity Weather Group said.
Traders are paying attention to the weather amid concerns dryness could trim output. Traders said the rains should help encourage planting and early development of the next crop.
World supplies of wheat are not low. Yet, output is important as global demand for the grain is expected to increase as livestock producers look for alternative feed ingredients to high-priced corn.
Traders are waiting for the U.S. Department of Agriculture to issue an estimate Friday for how much wheat was in storage at the beginning of the month. Some are stepping back from trading amid concerns the government may surprise the markets with larger-than-expected estimates for grain stocks.
"We'll wait and see what the USDA has to say," said Kayla Burkhart, a grain merchandiser in North Dakota.
In other news, traders are keeping an eye on foreign demand, with Tunisia's state grains buyer tendering to buy 67,000 metric tons of optional-origin milling wheat. The USDA will release weekly data on U.S. grain exports Thursday.
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