February 23, 2007

 

US Wheat Outlook on Friday: Seen 2-4 cents lower after weaker overnight trade

 

 

U.S. wheat futures are expected to begin Friday's day session trading 2 to 4 cents lower following weaker prices overnight and ideas that wheat is overdone to the upside and due for a pullback, sources said.

 

In overnight electronic trading, CBOT March wheat declined 4 cents to US$4.85 1/2 per bushel, while March KCBT hard red wheat fell 3 1/2 cents to US$5.08.

 

Wheat could trade weaker to start as the market looks overbought and see a pullback after the recent strength and ahead of the weekend, an analyst said.

 

However, export sales were "pretty solid," and could provide some support, a floor trader said.

 

The U.S. Department of Agriculture reported that weekly wheat export sales were 475,800 metric tonnes for the week ended Feb. 15, which includes 25,000 metric tonnes for delivery next year. Analysts had expected sales of 300,000-700,000 metric tonnes.

 

Japan, Egypt and Italy were the largest buyers on the week.

 

Price direction remains with the speculative interests, a commission house analyst says. If they continue to buy, the market should be supported, but they are the key as there was little fresh news out overnight, he added.

 

In the U.S. Midwest soft red winter wheat belt, snow, ice and rain are forecast for Saturday and snow may continue into Sunday in eastern sections of the region with precipitation totals of 0.50-1.50 inches possible, DTN Meteorologix Weather said. Snowfall of 6-to-12 inches is expected in northern and some central areas. Temperatures are expected to average near-to-below normal north and near-to-above normal south Saturday and below normal Sunday.

 

In the U.S. hard red winter wheat belt, snow, ice, rain with possible severe thunderstorms are expected in part of the region Saturday with the precipitation ending as all snow Sunday, Meteorologix Weather said. Strong winds are associated with this weather and blizzard conditions could develop for parts of Kansas, Colorado and Nebraska, Meteorologix said. Temperatures are expected to average near to below normal west and above normal east on Saturday and near to below normal Sunday.

 

On daily open auction technical charts, CBOT May wheat settled nearer the session high and hit a fresh seven-week high, a technical analyst said. Fresh speculative buying from funds has helped the bulls regain good upside technical momentum, he said. The bulls' next upside objective is closing prices above resistance at US$5.10 per bushel. The next downside objective is closing prices below support at US$4.85 per bushel.

 

First resistance for CBOT May is seen at Thursday's high of US$5.04, and then at US$5.10. First support is seen at US$5.00, and then at US$4.95.

 

May KCBT also touched a seven-week high and the bulls have regained fresh technical momentum, the analyst said. The bulls' next upside price objective is closing prices above resistance at US$5.30 per bushel while the bears' next downside objective is closing prices below solid support at US$5.05.

 

First resistance for KCBT May is seen at US$5.20 and then at US$5.25. First support is seen at US$5.15 and then at US$5.10.

 

In other wheat news, the Commodity Futures Trading Commission is scheduled to release the Commitment of Traders report for the period ending Feb. 20 Friday afternoon.