March 23, 2007

 

US Wheat Outlook on Friday: Flat to 1 cent up following overnight action

 

 

U.S. wheat futures are called to open Friday's day session flat to 1 cent firmer with some mild follow-through buying expected from the overnight, analysts said.

 

In e-cbot trading, Chicago Board of Trade May wheat gained 1 cent to US$4.68, while CBOT July wheat was up 1/4 cent at US$4.80 3/4.

 

There continues to be a lack of fresh news to direct market activity, and wheat will probably keeping looking toward the CBOT corn market for leadership, an analyst said. Outside markets, including crude oil, are firmer and could help lead corn and wheat higher, he added.

 

Still, market participants seem to be taking a step back from trading before the release of the U.S. Department of Agriculture's planting intentions and grain stocks report on March 30, CBOT floor traders said. That could keep day session activity choppy and two-sided, they noted.

 

CBOT and Kansas City Board of Trade wheat futures closed higher Thursday and near their session highs, but bears still have the slight near-term technical advantage, a technical analyst said.

 

The next downside price objective for the bears is closing CBOT May prices below solid support at this week's low of US$4.52. Bulls' next upside price objective is to close prices above solid resistance at US$4.75.

 

First resistance is seen at Thursday's high of US$4.69 1/2 and then at US$4.75. First support lies at Thursday's low of US$4.60 1/2 and then at US$4.58 1/2.

 

At KCBT, the bears' next downside objective is closing May prices below solid support at the January low of US$4.75 1/2. Bulls' next upside price objective is closing prices above solid chart resistance at US$5.00.

 

First resistance is seen at Thursday's high of US$4.89 and then at US$4.95. First support is seen at Thursday's low of US$4.81 and then at this week's low of US$4.76.

 

Looking at the weather, rain and warm temperatures in the U.S. Southern Plains during the next few days will allow for nearly ideal growing conditions, DTN Meteorlogix said.

 

Wet weather is also present in wheat-growing areas of the U.S. Corn Belt, T-Storm Weather reported Thursday. In that area, however, the rain has become too heavy and is seen as unfavorable for wheat, the weather service said.

 

In other news, Argentine wheat prices held steady on the week, with a government closure of the wheat export registry and confusion surrounding the wheat subsidy program making traders hesitant to step into the market, analysts said. High expected wheat production in the U.S. and Australia was also weighing on wheat prices, an analyst said.

 

The government last week suspended the wheat and wheat flour export registry to ensure domestic supply, although it was reopened after officials reached an agreement with the miller federation.

 

The Canadian Wheat Board, meanwhile, has left unchanged its monthly price projections for most grades of wheat that will be sold during the upcoming 2007-08 crop year, which begins Aug. 1.

 

The CWB noted U.S. winter wheat crop conditions have significantly improved from the year-ago level. U.S. grain futures markets were lower compared to last month, largely on an improved production outlook. As a result, prices were expected to remain volatile as the production year moves forward.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release its commitment of traders report for the week ended March 20.