May 18, 2007

 

US Wheat Outlook on Friday: Up 1-2 cents, taking cue from e-CBOT, corn

 

 

U.S. wheat futures are expected to start Friday's day session firmer, taking their cue from modest gains overnight and looking toward activity in the neighboring corn market, traders say.

 

Benchmark Chicago Board of Trade July wheat is called to open 1-2 cents higher per bushel. In e-cbot activity, CBOT July wheat rose 2 3/4 cents to US$4.88 1/4.

 

The overnight gains should inspire some follow-through buying, although market participants may later take some profits going into the weekend, a CBOT floor trader said. Wheat will be watching activity in the CBOT corn market for leadership, he added.

 

In general, there is not much strong, market-moving news out to direct wheat prices, an analyst said. Seasonal tendencies for prices to slump going into harvest will add some pressure, he noted.

 

The bulls' next upside price objective is to close CBOT July wheat above solid resistance at this week's high of US$5.07 1/2, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at the May low of US$4.78.

 

First resistance is seen at US$4.00 and then at Thursday's high of US$4.96 1/2. First support lies at Thursday's low of US$4.84 and then at US$4.80.

 

At the Kansas City Board of Trade, which trades hard red winter wheat, the bulls' next upside price objective is closing July wheat above solid chart resistance at this week's high of US$4.93. The bears' next downside objective is closing prices below solid support at the May low of US$4.71.

 

First resistance is seen at Thursday's high of US$4.85 and then at US$4.88. First support is seen at Thursday's low of US$4.78 and then at US$4.75.

 

HRW wheat grown in the U.S. Southern Plains should see scattered showers and thundershowers return to the region during Monday or Tuesday, DTN Meteorlogix reported. That will create favorable soil moisture for wheat, although there is still some risk for above average disease pressure, the weather firm said.

 

In central China, the North China Plain continues to be much drier than normal during the next five days, increasing stress to winter Wheat, Meteorlogix said. Long range charts suggest a chance for thunderstorms next week, but the outlook is somewhat uncertain, the firm added.

 

Moderate to heavy thunderstorms occurred as expected through Victoria and New South Wales in Australia during the past 24 hours. The rains heartened farmers, energizing them for a big planting of winter crops, industry participants said. The West Australia wheat belt, however, is still trending drier after early May rainfall, Meteorlogix noted.

 

Crops in the western Ukraine, meanwhile, will benefit from recent rainfall and cooler temperatures, the weather firm said. The next chance for thundershowers in the east Ukraine appears to be next Thursday or Friday. Until then it will be warm to hot and dry in the region, reducing soil moisture for wheat, the firm said.

 

In Argentina, rain will be needed in the southern wheat belt to ensure favorable germination and early development of this crop, but northern wheat areas are still wet from prior rains, according to Meteorlogix.

 

In other news, India's government-run agencies have so far procured 10.3 million metric tonnes of wheat from farmers in 2007, up from 9.2 million tonnes for the whole of 2006, a government official said Friday. While the bulk of purchases have been made in the northern provinces of Punjab and Haryana, the government has also procured about 250,000 tonnes from the northwestern province of Rajasthan, which is known for growing rapeseeds.