April 11, 2008

 

US Wheat Outlook on Friday: Seen mixed on overnight, CBOT rebound

 

 

U.S. wheat futures are poised to start Friday's day session mixed, with Chicago Board of Trade contracts seen rising in a rebound from losses, traders said.

 

Benchmark CBOT May wheat is called to open 8 to 10 cents per bushel higher. In overnight electronic trading, CBOT May wheat rose 10 1/2 cents to US$9.33 1/2.

 

CBOT wheat is bouncing in a turnaround from a setback Thursday, floor traders said. Kansas City Board of Trade wheat futures are also expected to start mostly firmer. Minneapolis Grain Exchange wheat may see some early selling after slipping overnight, but the market should find spillover support from strength at the CBOT, a trader said.

 

Wheat is still considered a follower of neighboring markets and looks technically weak, analysts said. A "potentially very bearish" flag pattern appears to be starting to form on the daily chart for CBOT July wheat, which represents the new crop, said Mike Zuzolo, analyst for Risk Management Commodities.

 

If CBOT July wheat loses the US$9.20 support line, the contract could be setting up for another leg down of 75 cents to US$1, Zuzolo said in a note to clients. CBOT July wheat overnight rose 11 cents to US$9.47 1/4.

 

The bulls' next upside price objective is to push and close CBOT July wheat 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 last week's low of US$9.05, he said.

 

First resistance is seen at Thursday's high of US$9.61 and then at US$9.73. First support lies at US$9.33 and then at this week's low of US$9.14, the technical analyst said.

 

There was not much fresh news out overnight for the wheat markets. Traders will likely continue to focus on the weather and on influence from other markets, an analyst said.

 

Precipitation that occurred this week in the U.S. central and southern Plains will help improve the condition of hard red winter wheat, according to DTN Meteorlogix. However, conditions may turn windy and hot next week, especially in the driest western areas, the private weather firm said in a forecast.

 

"This will deplete most of the moisture that fell in western areas," Meteorlogix said.

 

Soft red winter wheat in the Delta should see dry, but cold weather this weekend and early next week, Meteorlogix said. Conditions should be much warmer later next week and still mainly dry, the firm said.

 

"There is some risk to any flowering wheat in the region due to cold temperatures," Meteorlogix said.

 

Rainfall through the North China Plain this week will help supplement irrigation for winter wheat. Rain and thunderstorms also will help recharge soil moisture through Spain and improve the outlook for wheat, Meteorlogix said.