March 14, 2008

 

US Wheat Outlook on Friday: 7-9 cents weaker on profit-taking, follow-through

 

 

U.S. wheat futures are expected to start Friday's day session lower on profit-taking and follow-through selling, traders said.

 

Chicago Board of Trade May wheat is called to open 7 to 9 cents lower per bushel. In overnight electronic trading, CBOT May soybeans fell 8 3/4 cents to US$12.35 1/4.

 

There should be follow-through selling in wheat after weakness overnight and on Thursday, traders said. Traders are taking money off the table after sharp gains early in the week, they said.

 

Activity in the markets will remain volatile, with some traders sitting on the sidelines until trading settles down, an analyst said. It would not be surprising to see prices push higher during the session amid strength in the neighboring CBOT corn and soybean markets, a CBOT floor trader said. Ongoing concerns about tight old-crop stocks also continue to underpin the market, the analyst said.

 

There was not much fresh news out for the markets to feed on, traders said. Weather forecasts continue to predict moisture in U.S. wheat areas, which is bearish, they said.

 

It looks as though southern and east-central areas of the Plains will benefit more from precipitation within the next five days than northwestern areas of the Plains, DTN Meteorlogix said. In the eastern Midwest and Delta, a cool, wet weather pattern during the next seven days will favor winter wheat, the private weather firm said.

 

Conditions will be dry in India's major north-central and northwest wheat areas, Meteorlogix said. Temperatures should be near to above normal, the firm said.

 

In China, most wheat areas are expected to be dry during the next five to seven days. Temperatures should be warmer into early next week and cooler later next week, the firm said.

 

The bulls' next upside price objective is to push and close CBOT July wheat, which represents the new crop, above strong technical resistance at Thursday's contract high of US$12.72 3/4, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at US$11.25.

 

First resistance is seen at US$12.50 and then at US$12.70. First support lies at US$12.00 and then at US$11.80.

 

At the Kansas City Board of Trade, the bulls' next upside price objective is pushing and closing July wheat above solid technical resistance at the contract high of US$13.00, the technical analyst said. The bears' next downside objective is pushing and closing prices major psychological support at US$12.00.

 

First resistance is seen at US$13.00 and then at US$13.25. First support is seen at US$12.50 and then at US$12.25.