May 15, 2009

 

US Wheat Outlook on Friday: Seen mixed; watching weather, MGE

 

 

U.S. wheat futures are expected to start mixed Friday, as traders watch neighboring markets and weather forecasts for hints about planting progress.

 

Chicago Board of Trade July wheat in overnight electronic trading slipped 4 cents to US$5.89 1/4 a bushel.

 

CBOT corn and soybeans edged higher in overnight trading and could lend some spillover support to wheat if they extend gains during the day session, said Jerry Gidel, analyst for North America Risk Management Services. Worries about late planting in the eastern U.S. Corn Belt have boosted corn lately, while soybeans have found support from concerns about tight supplies.

 

"The corn and beans are going to continue to be the kind of mentors of the wheat market," Gidel said.

 

Slow planting progress in the northern U.S. Plains remains supportive for Minneapolis Grain Exchange spring wheat futures, traders said. Cool, wet weather has kept producers out of their fields for weeks.

 

Overall, 35% of U.S. spring wheat was planted as of Sunday, down from 77% last year and the average of 78%, according to the U.S. Department of Agriculture. MGE wheat will find some enthusiasm to the upside if the crop is not at least 50% planted by Monday, when the USDA's next crop progress report comes out, Gidel said.

 

"Another cold event this weekend may threaten any emerged crops," private weather firm DTN Meteorlogix said. "However, since emergence is well behind normal this should not be a widespread problem."

 

There could be some profit-taking ahead of the weekend, a trader said. Bearish signals from outside markets, including weakness in crude oil and strength in the dollar, could add pressure to the grains, he said.

 

Resistance for CBOT July wheat remains at US$6, Gidel said. The market sold off earlier this week after the contract neared that level.

 

CBOT July wheat on Thursday closed firmer and nearer the session high. Bulls still have some near-term upside momentum on their side and would gain more by producing a bullish weekly high close Friday, a technical analyst said.

 

The next downside price objective for the bears is pushing and closing CBOT July wheat below solid technical support at US$5.48, the analyst said. The bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.35, he said.

 

First resistance is seen at Thursday's high of US$5.95 1/2 and then at this week's high of US$6.02 1/4. First support lies at US$5.83 3/4 and then at this week's low of US$5.79 1/4.