February 11, 2010

 

US Wheat Outlook on Thursday: Seen starting down, trading both sides

 

 

U.S. wheat futures are poised to start slightly lower Thursday in a setback from gains but could trade both sides amid gains in other markets and support from technical buying, traders said.

 

Chicago Board of Trade March wheat is called to open 1 to 3 cents per bushel lower. In overnight electronic trading, CBOT March wheat slipped 3 1/4 cents to US$4.93 1/2.

 

Follow-through selling from the overnight may weigh on prices at the start of trading as the markets backpedal a bit from strength on Wednesday, a trader said. The fundamental storyline remains bearish for wheat because world supplies are large, he said.

However, the markets have the potential to find support from technical buying and short-covering, a trader said. Non-commercial speculative funds are net short about 65,000 contracts in CBOT wheat futures and options, a CBOT trader said.

 

CBOT March wheat could trigger additional technical buying if it rises above Wednesday's high of US$5.03, a trader said. The contract faces technical resistance around US$5.04, he said.

 

The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$4.66 1/2, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the December low of US$5.14 1/4, he said.

 

First resistance is seen at Wednesday's high of US$5.03 and then at US$5.10, the technical analyst said. First support lies at US$4.89 and then at Wednesday's low of US$4.80 3/4, he said.

 

"Bulls would gain some fresh upside near-term technical momentum to suggest a market low is in place by producing good follow-through buying on Thursday or Friday," the technical analyst said.

 

Neighboring CBOT corn and soybeans are expected to start firmer, which could contribute to a positive tone for wheat, a trader said. Outside markets like crude oil and the U.S. dollar are not exerting a strong influence on the grains, he said.

 

There is a lack of fresh fundamental news out regarding wheat. U.S. winter wheat areas are cold but not cold enough to harm the crop, according to private weather firm DTN Meteorlogix.

 

The U.S. Department of Agriculture is slated to issue its weekly export sales report at 8:30 a.m. EST Friday. The release of the data was delayed a day due to the snowstorm on the East Coast.