May 1, 2009

 

US Wheat Outlook on Friday: Up on follow-through, watching weather

 

 

U.S. wheat futures are expected to start firmer Friday on follow-through buying, although profit-taking could weigh on the markets during the session, traders said.

 

Chicago Board of Trade July wheat is called to open 3 to 5 cents per bushel higher. In overnight electronic trading, CBOT July wheat gained 5 1/2 cents to US$5.42.

 

Volume in general should be relatively light as many markets around the world are closed for May Day, traders said. That means the activity of funds and weather forecasts heading into the weekend "will be the driving fundamentals," according to a note from AgResource Company.

 

Conditions look more favorable for spring wheat planting in the northern U.S. Plains in the coming days after delays caused by excessively wet, cool weather, traders said. Drier weather is forecast for the region during the next five to six days, with temperatures expected to be "very cool at first but much warmer later," according to private weather firm DTN Meteorlogix.

 

There are some worries about excessive moisture for hard red winter wheat in parts of the U.S. southern Plains, said Tom Leffler, owner of Leffler Commodities in Augusta, Kan. Farmers "continue to get too much rain through the central part of Oklahoma and through central Kansas," he said.

 

"It's not helping our crop any because we're getting too much," he said about the rain. "You've got the ground saturated. Too much moisture is not what wheat needs. We need warmer temperatures and drier weather."

 

There's an absence of fresh demand news for the markets to feed on, Leffler said. There doesn't appear to be "anything out there in the news that's going to get anybody excited," he said.

 

Still, it would not be surprising if wheat "garners the spotlight" as funds are heavily short in CBOT wheat and the July contract may find technical support above its 50-day moving average, AgResource said. The contract's 50-day moving average is around US$5.38.

 

The next downside price objective for the bears is pushing and closing CBOT July wheat below major psychological support at US$5.00, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.50 1/2, he said.

 

First resistance is seen at US$5.44 3/4 and then at US$5.50. First support lies at US$5.29 1/2 and then at US$5.25, he said.

 

In other news, CBOT May wheat deliveries remained heavy at 7,377 contracts. The large deliveries are not surprising after heavier-than-expected deliveries on first notice day Thursday and should not have a big influence on prices, an analyst said.