April 27, 2007

 

US Wheat Outlook on Friday: 1-3 cents lower on profit taking, weaker e-CBOT

 

 

U.S. wheat futures are expected to start Friday's day session trading 1-to-3 cents lower as pre-weekend profit taking after the recent run up in prices and weaker prices in overnight activity is expected to weigh on the market, analysts said.

 

In overnight electronic trading, CBOT July wheat fell 2 1/2 cents to US$5.18 1/2 per bushel, while July KCBT hard red wheat slipped 1 cent to US$5.03.

 

Wheat should start out a little weaker but could trade on both sides of Thursday's settlement prices, a commission house analyst said. The market remains concerned about the extent of the damage the U.S. wheat crop received earlier this spring but has had good price gains recently and could see some profit taking ahead of the weekend and Monday's crop progress report when the U.S. Department of Agriculture will update wheat conditions, he said.

 

Technically the market is a little overdone to the upside and wheat could see a retrenchment from recent levels, a floor trader said.

 

In addition, Australia received light rains overnight and parts of Europe and the Ukraine are expected to see some rain next week, which could also temper buyers' enthusiasm after concerns about dry weather potentially impacting wheat production in those areas, the trader added.

 

In the U.S. Midwest soft red winter wheat belt, drier weather is forecast for the weekend extending into Monday, DTN Meteorologix Weather said. Temperatures are expected to average near-to-above normal Saturday and above normal Sunday.

 

In the U.S. hard red winter wheat belt mainly dry weather is expected over the weekend with temperatures above to well above normal DTN Meteorologix Weather said.

 

On daily open auction technical charts, CBOT July wheat reached another new life-of-contract high but closed near the session low, a technical analyst said. While bulls have the near-term technical advantage bulls should not get too excited about more upside potential from present levels, as prices don't stay above the US$5.00 level too long, the analyst said.

 

First resistance is seen at US$5.25 and then at the contract high of US$5.30. First support is seen at US$5.17 1/2, US$5.16 and then at US$5.08.

 

July KCBT closed near the session low Thursday. The bulls' have the near-term technical advantage and their next upside price objective is closing prices above this weeks high of US$5.18 per bushel, the analyst said. First resistance is seen at US$5.12 and then at US$5.18. First support is seen at US$5.00 and then at US$4.95.

 

In other wheat news, India has invited offers from global trading companies to bid for call options contracts to import wheat, a senior government official said Friday. Low local wheat purchases by the government has led to the plan, which all companies are invited to bid to supply wheat and will have to quote a base delivery price and a premium in their offer.