March 7, 2008

 

US Wheat Outlook on Friday: Seen lower on profit-taking pullback

 

 

Profit-taking and spillover pressure from neighboring markets are expected to weigh on U.S. wheat futures Friday after the markets slumped overnight, analysts said.

 

Chicago Board of Trade May wheat is called to open 15 to 20 cents per bushel lower. In overnight electronic trading, CBOT May wheat fell 22 cents to US$11.03.

 

Kansas City Board of Trade May wheat overnight closed down 23 3/4 cents at US$11.58 3/4. Minneapolis Grain Exchange May wheat finished down 18 1/4 cents at US$13.61 1/2.

 

The markets are retreating from high prices, and some traders are taking money off the table before the weekend, analysts said. The neighboring CBOT corn and soy markets also are expected to start on the defensive.

 

CBOT soybeans and soyoil are expected to lead the downside. Their losses could weigh on wheat, traders said.

 

There was not much fresh fundamental news out overnight for the wheat markets, traders said. Deliveries against the CBOT March wheat future were two contracts, and the last trade date assigned was Feb. 26.

 

There were 86 intentions to deliver KCBT March wheat out of Hutchinson, Kan., and 19 re-intentions. No deliveries were reported against MGE March wheat.

 

CBOT and KCBT July wheat, which represent the new winter wheat crop, closed higher Thursday. However, recent price action has formed potentially bearish pennant patterns on the daily bar charts, a technical analyst said. Bullish weekly high closes on Friday would likely negate the chart patterns, he said.

 

CBOT bulls' next upside price objective is to push and close July wheat above psychological resistance at US$11.00, the analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$10.00.

 

First resistance is seen at Thursday's high of US$10.87 and then at US$11.00. First support lies at US$10.63 and then at US$10.50.

 

The next upside price objective for KCBT bulls is pushing and closing July wheat above major psychological resistance at US$12.00, the analyst said. The bears' next downside objective is pushing and closing prices below major psychological support at US$11.00.

 

First resistance is seen at Thursday's high of US$11.55 and then at US$11.90. First support is seen at Thursday's low of US$11.14 and then at US$11.00.

 

Spot wheat was traded Wednesday on Argentina's Rosario Grain Exchange for the first time since Feb. 11, when it closed at ARS570(US$180.66) per metric tonne. The spot wheat market is paralyzed due to a closure of exports.

 

Argentine farmers are protesting the continued blockage of exports and plan to rally in front of a number of grain export terminals next week. The government extended the closure of the wheat export registry last week, preventing any shipments before April 8.