February 16, 2007

 

US Wheat Outlook on Friday: Called mixed; two-sided trade seen

 

 

U.S. wheat futures are expected to begin Friday's day session mixed as weaker than expected weekly export sales and the absence of other inputs is expected to limit volatility, sources said.

 

In overnight electronic trading, CBOT March wheat rose 3/4 cent to US$4.54 per bushel, while March KCBT hard red wheat slipped 1 1/4 cents to US$4.85.

 

Whet export sales were disappointing and wheat could be on the defensive, a CBOT floor broker said.

 

The U.S. Department of Agriculture reported weekly wheat export sales were 361,500 metric tonnes for the week ended Feb. 8, below the 400,000-650,000 metric tonnes expected.

 

Sales were disappointing, and there was no fresh news out overnight which could weigh on the market. However, corn export sales were better than expected and if corn rallies wheat should see some spillover support, the broker added.

 

There is not much news to trade from and the weather is still bearish but the market is facing a long weekend and there could be some position squaring, a floor analyst said.

 

In the U.S. Midwest soft red winter wheat belt, mainly dry conditions are forecast Saturday and Sunday in the west with the chance for snow in the eastern section of the region Sunday, DTN Meteorologix Weather said. Temperatures expected to average below normal in the period.

 

In the U.S. hard red winter wheat belt, mostly dry weather is forecast for Saturday and Sunday, with the chance for light snow north and showers south on Monday, Meteorologix Weather said. Temperatures are expected to average near-to-above normal Saturday and above normal Sunday.

 

On daily open auction technical charts, CBOT March wheat closed near the session high Thursday, though market bears still have the near-term technical advantage, a technical analyst said. The next downside price objective for the bears remains closing prices below solid support at the January low of US$4.47 1/2, with the bulls' upside objective closing prices above solid resistance at US$4.70 per bushel.

 

First resistance for CBOT March is seen at US$4.55 3/4 and then at US$4.61. First support is at US$4.47 1/2, and then at US$4.40.

 

March KCBT wheat prices also closed near the session high on short covering, the analyst said. The bears' next downside objective is closing prices below the January low of US$4.67 per bushel.

 

First resistance for KCBT March is seen at US$4.90 and then at US$4.95. First support is seen at US$4.80 and then at US$4.77.

 

In other wheat news, the Commodity Futures Trading Commission is scheduled to release the commitment of traders report for the period ending Feb. 13.

 

On Monday, the CBOT will be closed in observance of President's Day.