May 30, 2008

 

US Wheat Outlook on Friday: Seen mixed; technical rebound possible

 

 

U.S. wheat futures are expected to start Friday's day session mixed, with a modest technical bounce possible after losses Thursday, traders said.

 

In overnight electronic trading, Chicago Board of Trade July wheat was flat at US$7.43 1/2 per bushel.

 

The markets may rebound a bit after bears accomplished their downside technical objective by briefly pushing CBOT July wheat below US$7.40 1/2 on Thursday, an analyst said. The contract closed in negative territory, but above that technical support level. There also could be some end-of-the-month position evening, the analyst said.

 

The bulls' next upside price objective is to push and close CBOT July wheat above technical resistance at US$8.00, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below technical support at US$7, he said. First resistance is seen at this week's high of US$7.67 3/4 and then at US$7.76 1/2. First support lies at Thursday's low of US$7.30 3/4 and then at US$7.00.

 

Weekly U.S. wheat export sales were -340,700 metric tonnes for delivery in 2007-08 and 904,600 tonnes for delivery in 2008-09, according to the U.S. Department of Agriculture. The new marketing year starts June 1, and it wasn't surprising to see old-crop sales roll over to the new crop year, traders said.

 

The total business is "solid, but I wouldn't read much into it," a CBOT floor broker said. "The consensus is there's going to be a lot of wheat in the world."

 

The USDA has predicted the world will grow more wheat in 2008-09 than ever before after producers expanded plantings to take advantage of high prices. Global weather also has been generally favorable for wheat.

 

Harvest has started in the U.S. southern Plains, which is seen as bearish for prices. Buyers don't feel as if there is a strong need to secure wheat before cutting gets into full swing and brings more supplies to market, a trader said.

 

Hotter temperatures during the next three to five days should increase stress to hard red winter wheat in the central and southern U.S. Plains, especially in areas that are too dry, DTN Meteorlogix said. Friday's longer-range charts suggest the hot, dry pattern breaks down during the first part of the six-to-10 day period, the private weather firm said.

 

In Australia, wheat areas of southeast Queensland may see some rain, although New South Wales, Victoria and South Australia should stay mostly dry during the next seven days, according to Meteorlogix. Eastern Ukraine, meanwhile, could turn much cooler, potentially putting developing grains at risk should temperatures fall to freezing.