February 22, 2008

 

US Wheat Outlook on Friday: Up 3-5 cents on overnight strength

 

 

U.S. wheat futures are predicted to begin trading 3-5 cents higher Friday, underpinned by follow-through buying from the overnight session despite weak export sales, an analyst said.

 

In overnight electronic trading, CBOT May wheat rose 1/4 cent to US$10.45 3/4 per bushel, KCBT May wheat gained 5 1/4 cents to US$10.92, and MGE May wheat jumped 13 3/4 cents to US$15.72.

 

Wheat should open higher based on the gains established in the overnight trade at the KCBT and the MGE, an analyst said. Weekly export sales were poor and could act as a drag on any upside move, the analyst added.

 

The U.S. Department of Agriculture reported that weekly wheat export sales were 238,500 metric tonnes for the week ended Feb. 14. Analysts had expected sales between 250,000-to-600,000 tonnes. Included in the total were sales of 137,500 tonnes for delivery in the 2008-09 crop year.

 

The release of the USDA's production and supply and demand assumptions at its Outlook Forum are not expected to have much influence on prices, a commission house analyst said. The Forum numbers are not a "big deal," it's just an opinion and those numbers are likely to change over the next couple of months, the analyst said.

 

The USDA pegged 2008-09 wheat production at 2.33 billion bushels, with the carry over at 538 million bushels, well above the 272 million estimated in the 2007-08 marketing year. Exports are estimated at 950 million bushels, down 21%, due to increased export competition, the USDA said.

 

Beyond the exports and information from the Forum, there isn't much news to trade on, an analyst said.

 

On daily open auction technical charts, CBOT July wheat closed near the session high and had a bullish "outside day" up on the daily bar chart Thursday, a technical analyst said. The next upside objective is to push and close July prices above resistance at US$9.83 1/2 per bushel. The next downside objective for the bears is pushing prices below support at US$9.34 1/2.

 

First resistance is seen at US$9.70, Thursday's high, and then at US$9.83 1/2. First support is seen at US$9.50 and then at US$9.44, Thursday's low.

 

July KCBT wheat settled slightly near the session high. The next upside price objective in July remains pushing prices and closing prices above resistance at US$10.50 per bushel, while the bears' downside objective is pushing prices below psychological support at US$10.00.

 

First resistance is seen at US$10.39, Thursday's high, and then at US$10.50. First support is seen at US$10.18 and then at this week's low of US$10.11.