U.S. wheat outlook: Seen starting up slightly in rebound

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CHICAGO (Dow Jones)--U.S. wheat futures are expected to start slightly higher Tuesday as stabilizing external markets support a recovery from a four-week low.

Traders predict soft red winter wheat for September delivery, the most actively traded contract, will open 2 cents to 4 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract edged up 1 3/4 cents, or 0.3%, to $6.58 1/4 a bushel.

Stabilizing prices for crude oil and equities should allow the grains to recover after spillover pressure from sharp losses in the external markets recently dragged down agricultural commodities. Oil prices were rising slightly ahead of the opening of the trading session for grains.

"Some support early in the session should reduce the chance of panic selling developing in the ag complex," wrote analysts at Benson Quinn Commodities.

The grain markets have been taking direction from external markets lately due to increased concerns about a global economic slowdown. Yet, prices for wheat have not pulled back enough to attract significant new export business, traders said, noting concerns about demand could limit gains.

Export demand has stayed lackluster lately due to increased competition from countries in the Black Sea region offering less-expensive wheat. Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, said Tuesday it bought one shipment of 60,000 metric tons of Russian wheat and none from the U.S.

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