May 16, 2008

 

US Wheat Outlook on Friday: Seen up 3-5 cents on rebound, spillover

 

 

Technical buying and spillover support are expected to push U.S. wheat futures higher at the start of Friday's day session, traders said.

 

Benchmark Chicago Board of Trade July wheat is called to open 3 to 5 cents per bushel higher. In overnight electronic trading, CBOT July wheat rose 4 1/4 cents to US$7.75 3/4.

 

Wheat is in an oversold condition and due for a technical rebound after sliding to fresh five-month lows this week, traders said. CBOT July wheat Thursday dipped as low as US$7.49, which accomplished the downside objectives of some market participants, a trader said.

 

Firm CBOT corn and soybeans should lend support to wheat, traders said. Outside markets like crude oil and metals also are pointing higher, they said.

 

However, wheat's gains may not hold ahead of the weekend and amid a lack of fresh news, an analyst said. Market participants seem reluctant to chase prices too hard in either direction, he said.

 

CBOT July wheat is in a two-month-old downtrend on the daily bar chart, a technical analyst said. Bears have the overall near-term technical advantage, he said.

 

The bulls' next upside price objective is to push and close CBOT July wheat above psychological resistance at US$8.00, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below technical support at Thursday's low of US$7.49, he said.

 

First resistance is seen at US$7.77 and then at US$7.90. First support lies at Thursday's low of US$7.49 and then at US$7.25.

 

Long-term expectations for increased global production continue to hang over the market, an analyst said. The world is set to produce more wheat in 2008-09 than ever before due to favorable weather and high prices, which encouraged expanded plantings, according to the U.S. Department of Agriculture.

 

Pakistan floated a global tender to buy 250,000 metric tonnes of wheat to check soaring local prices due to tight supply, a senior government official said. Despite a good crop, Pakistan's wheat supplies are tight due to an increase in shipments to neighboring Afghanistan. Pakistan plans to import 2.5 million tonnes of wheat by February to build its buffer stocks and check prices

 

Wheat stocks in Ukraine on May 1, meanwhile, totaled 4.3 million tonnes, 28% more than a year ago, according to the state statistics committee. Ukraine is limiting the export of grain with export quotas, and industry members are concerned the country's storage facilities will not be able to accommodate all the grain available after harvest in July.