June 1, 2006

 

US Wheat Outlook on Thursday: Down 1/2 cent-1 cent on followthrough sales, gold

 

 

U.S. wheat futures were called to open down 1/2 cent to 1 cent per bushel Thursday on follow-through technical selling after Wednesday's late break in heavy volume to a near 3-week low in Chicago Board of Trade July wheat futures, brokers said.

 

Losses in gold futures, strength in the U.S. dollar and light U.S. winter wheat harvest pressure were also deemed bearish for Thursday's U.S. wheat futures trade, they added.

 

U.S. wheat futures generally lag under pressure from the advancing U.S. hard and soft red winter wheat harvests at this time of year, but analysts this season have said that concerns about the tight supplies of U.S. hard wheat should limit losses.

 

Moreover, they note that global wheat supplies have tightened this year amid droughts in several wheat producing countries including China, Spain and increasingly Australia's New South Wales.

 

Forecasts for the U.S. hard red winter wheat belt called for scattered rains through Thursday night and then drier weather through Monday. Temperatures were expected to be above normal through Monday, according to DTN Weather.

 

In the overnight e-CBOT session, most-active July wheat closed up 3/4 cent at US$3.94 1/4 per bushel.

 

"Wednesday's price action was the strongest technical clue so far that a near-term market top is in place," a technical source said.

 

First resistance for CBOT July wheat was seen at US$3.95 3/4 and then at US$4.00. First support was put at US$3.91--Wednesday's low--and then at US$3.85.

 

Kansas City Board of Trade July wheat ended overnight down 1 1/2 cents at US$4.86 1/4 per bushel.

 

"More and more it appears that a market top may be close at hand, or in place," the technical source said. "Look for higher volatility in the near term. A close below support at US$4.70 would provide the bears with some better downside technical momentum."

 

First resistance for KCBT July wheat was seen at US$4.91 and then at US$5.00. First support was put at US$4.86 and then at US$4.80.

 

Cash U.S. hard red winter wheat basis bids were mixed Thursday, with a 2-cent gain in Manhattan and a 5-cent loss in Superior, Neb.; soft red winter wheat basis bids were steady to firm, with a 7-cent gain in Evansville, Ind.; and spring wheat basis bids were steady to firm, with a 1-cent gain in Minot, North Dakota, grain merchandisers said.

 

Overnight U.S. wheat export sales were quiet.