February 13, 2009

U.S. wheat futures are expected to experience a quiet, two-sided trade Friday, according to CBOT floor traders.

 

Chicago Board of Trade March wheat is called to open mixed. In overnight electronic trading, CBOT March and May wheat gained a 1/2 cent to close at US$5.39 1/4 and US$5.52, respectively. Nearby wheat contracts also fell a 1/2 cent to US$5.74 1/2 at the Kansas City Board of Trade, but gained 2 1/4 to US$6.41 3/4 at the Minneapolis Grain Exchange.

 

"We've done some technical damage over the last couple days, closing at a week low Thursday," a CBOT floor trader said. "But I don't know if anyone wants to press it into the weekend."

 

The market continues to watch drought issues in China and the Southern Plains hard red wheat growing areas, "but there's nothing a good spring rain can't cure," the trader said.

 

Crude oil is up, the U.S. dollar index is up and stock markets are relatively flat.

 

"Wheat prices [will] try to stabilize on the open this morning, after bouncing off key chart support on Thursday," said Farm Futures Senior Editor Bryce Knorr in his outlook.

 

"Wheat remains a follower as news is typically slow this time of year, with export business winding down and new crop weather concerns still under the radar in most areas."

 

After closing at a fresh two-month low, wheat is subject to "overall near-term technical advantage" with prices still in a five-week-old downtrend on the daily bar chart, a market technician said.

 

Bears are aiming to close March futures prices below solid technical support at US$5, he said, pegging first support at Thursday's low of US$5.37 and then US$5.25.

 

The bulls are pressing to close March futures prices above solid technical resistance at this week's high of US$5.77 a bushel, he said, placing first resistance at Thursday's high of US$5.52 1/4 and then at %5.66.

 

"Storms moving out of the central Plains today won't provide any relief to southern areas of the hard red winter wheat crop, keeping concerns about damage on the front burner for much of the region," Knorr said. "Official 6- to 10-day and 8- to 14-day forecasts remain dry as well, reflecting a typical pattern for La Nina years."

 

European wheat markets are trading near unchanged, underpinned by weather concerns in some wheat growing regions.