April 18, 2008

 

US Wheat Outlook on Friday: Profit-taking expected to add pressure

 

 

A lack of fresh supportive news is expected to keep U.S. wheat futures under pressure at the start of Friday's day session, traders said.

 

Benchmark Chicago Board of Trade May wheat is called to open 1 to 2 cents per bushel lower. In overnight electronic trading, CBOT May wheat slipped 1 1/2 cents to US$9.11 1/2.

 

Profit-taking should weigh on wheat amid an absence of new bullish inputs, a CBOT floor analyst said. Market participants like to take money off the table ahead of the weekend, he said.

 

Weakness in the outside markets and strength in the U.S. dollar may add additional pressure to wheat, an analyst said. CBOT corn was also weaker overnight.

 

Bullish fears about the potential for a freeze in the U.S. Plains have eased as some cold weather was taken out of forecasts for the region, an analyst said. Recent rainfall has favored spring growth of wheat in the Plains, but more rain is still needed, especially through the west Texas region and in the far west areas, DTN Meteorlogix said.

 

In the Delta, rain and thunderstorms are expected Friday. Conditions should be drier during the weekend and early next week before more rain develops later next week, Meteorlogix said.

 

Traders will continue to watch weather forecasts carefully amid concerns about delayed development of hard red winter wheat in the Plains and about the slow pace of hard red spring wheat planting in the northern Plains. The markets also are waiting to see Statistics Canada's estimates for wheat planting, due out Monday.

 

The area seeded to durum and spring wheat in Canada is expected to be up from last year because of solid global demand and strong price expectations, an analyst said. All-wheat seedings are seen at 22.8 million to 27.5 million acres, up from 21.617 million last year, according to analysts.

 

The bulls' next upside price objective is to push and close CBOT July wheat, which represents the new crop, above solid technical resistance at Thursday's high of US$9.60, 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$9.00, he said.

 

"A close below this week's low would be significantly bearish to suggest another leg down in prices in the near term," the technical analyst said.

 

First resistance is seen at US$9.40 and then at US$9.50. First support lies at Thursday's low of US$9.14 and then at US$9.00.

 

In other news, Tajikistan is looking for new source of wheat after its main suppler, Kazakhstan, suspended exports, according to the government press service. Tajikistan needs to import 900,000 tonnes of wheat this year.