April 4, 2008

 

US Wheat Outlook on Friday: Seen mostly up, watching limit-up MGE

 

 

U.S. wheat futures are expected to start Friday's day session mostly higher, with eyes on the surging nearby Minneapolis Grain Exchange contract, traders said.

 

Benchmark Chicago Board of Trade May wheat is called to open up 3 to 5 cents per bushel. In overnight electronic trading, CBOT May wheat was up 3 1/2 cents at US$9.40 1/2.

 

Kansas City Board of Trade May wheat overnight slipped 1 1/2 cents to US$9.94 3/4. MGE May wheat surged the exchange-imposed limit of 60 cents to US$13.35.

 

CBOT and KCBT wheat will continue to watch the MGE May contract as it was limit up overnight and has closed limit up for the past two days, traders said. MGE May wheat found strength recently from short-covering and commercial bull spreading, they said.

 

There should be underlying support from fresh demand that has been uncovered in the market, an analyst said. There has been talk about Algeria buying wheat, and Turkey said Thursday it had issued a tender for 100,000 tonnes of optional-origin wheat.

 

There also are still bullish concerns about dryness in the western U.S plains hard red winter wheat belt. Any significant rain during the next five days is mostly for the eastern areas and a little of the north, DTN Meteorlogix said.

 

"The long range is somewhat uncertain, but if there is any increase in rain chances it would probably be for the east and maybe a little of the central belt," the private weather firm said.

 

The U.S. Department of Agriculture on Monday is slated begin issuing its weekly crop progress reports. Traders are interested to see how the wheat is rated in the Plains and in the Midwest, where some areas have seen excessive rain.

 

The bulls' next upside price objective is to push and close CBOT July wheat, which represents the new crop, above major psychological resistance at US$10.00, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at this week's low of US$9.05, he said.

 

First resistance is seen at Thursday's high of US$9.65 and then at US$9.72. First support lies at Thursday's low of US$9.42 and then at US$9.31 1/2.

 

At the KCBT, bulls' next upside price objective is pushing and closing July wheat above solid technical resistance at US$10.75, the technical analyst said. The bears' next downside objective is pushing and closing prices below solid support at this week's low of US$9.55, he said.

 

First resistance is seen at Thursday's high of US$10.15 and then at US$10.25. First support is seen at Thursday's low of US$9.91 and then at US$9.75.

 

In other news, Argentine grain exporters will be able to start declaring wheat export commitments again next week, based on the government's most recent notice to exporters. The government said on March 18 that wheat exports would be opened again starting April 21. Exporters can only make declarations of shipments 15 days before actually shipping the goods, so April 7 is the first day the government will accept the new contracts.