March 17, 2006

 

US Wheat Outlook on Friday: Called 2-3 cents higher on short covering

 

 

U.S. wheat futures are forecast to start Friday's open auction session 2 to 3 cents higher on position squaring ahead of the weekend after four straight days of weaker prices, sources said.

 

In overnight e-CBOT trading, May wheat rose 2 1/2 cents to $3.55 1/2, and July gained 2 1/4 cents to $3.67.

 

Overnight at the KCBT, May ended 1 3/4 cents higher at $4.15 1/2, and July rose 2 3/4 cents to $4.20 1/2.

 

"The rain issue has already been priced," a floor trader said. The market has taken out some premium and not a drop of rain has fallen yet, the trader added.

 

May CBOT wheat has fallen over 35 cents from the high reached in last Friday's session.

 

Showers or light rain, with amounts up to .50 inch are forecast today from southern Oklahoma into northern Texas, DTN Meteorlogix Weather Service said. A chance for rain, rain changing into snow and thunderstorms during the weekend in the U.S. Central Plains with the heaviest precipitation .50-1.50 inches and locally heavier, should occur in southeast Kansas and parts of Oklahoma and Texas. Snow, up to 5-10 inches, should occur from northern Kansas northward through Nebraska, with significant snowfall still possible in southwest and central Kansas, Meteorlogix said.

 

Temperatures will be below normal north and near normal south in the region and well below normal Monday and Tuesday.

 

There is still moisture in the forecast for the hard red wheat belt but the market has been hit hard over the last several days and due for a bounce, a floor analyst said.

 

In the U.S. Midwest, it will be mainly dry through the weekend. Temperatures are forecast to average below normal, Meteorlogix weather said.

 

On technical charts, technical damage has occurred to suggest that a market top is in place, a technical analyst said. He sets first resistance for May CBOT wheat at $3.55, and then at $3.60. First support is seen at Thursday's low of $3.51 and then at $3.50.

 

The 14-day relative strength index is at 36.63 for CBOT May wheat.

 

In May KCBT wheat, prices hit a four-week low and the bears gained downside technical momentum this week, the analyst said. First resistance is seen at $4.19 1/2, Thursday's high and then at $4.25. First support is seen at $4.12, Thursday's low and then at $4.10.

 

Cash wheat basis bids were mostly unchanged Friday. Soft red wheat cash bids were mixed with Evansville Ind. unchanged at 25 cents under the May.

 

Hard red winter cash basis bids were unchanged with Hutchinson, Kan. unchanged at 11 cents under the May future.

 

Hard red spring basis bids were unchanged with Minot N.D. unchanged at 39 cents under May.

 

In other wheat news, two South Korea flour mills Dongah and CJ Corp., jointly bought 21,500 metric tonnes of U.S. origin wheat in a tender concluded Friday, a trader in Seoul said.

 

After the close, the Commodity Futures Trading Commission is scheduled to release the commitment of trader's data as of Tuesday, Mar. 14.