June 5, 2009

 

US Wheat Outlook on Friday: Down 2-4 cents on outside market pressure

 

 

U.S. wheat futures are expected to open lower Friday following overnight losses and pressure from outside markets, traders said.

 

Chicago Board of Trade wheat is called 2 to 4 cents lower. In overnight trade, CBOT July wheat was down 4 1/2 cents to US$6.30 3/4 per bushel and December wheat was down 4 cents to US$6.83 3/4.

 

Traders said the market would likely be a follower Friday, as wheat and the rest of the grain and oilseeds complex is directed by fund activity.

 

"Right now I think it's just living off the money flow coming into the market," said Shawn McCambridge, senior grains analyst for Prudential Bache. "(Wheat) is really going to rely on other markets for direction."

 

Although U.S. stocks are expected to open higher, which would be supportive to the grains, following a better-than-expected jobs report, a trader said that could be outweighed by a stronger dollar.

 

In export news, two South Korean flour millers purchased a total of 47,800 metric tonnes of U.S. wheat in a tender completed late Thursday, traders from both companies said Friday. Analysts also reported Thailand purchased 45,000 metric tonnes of U.S. wheat and that Taiwan will tender for 51,410 metric tonnes of U.S. wheat. A trader said the purchases were routine and not a big factor in Friday's trade.

 

Farm Futures said in a morning commentary that "importers used Wednesday's big sell off to boost sales."

 

McCambridge said that in addition to the macro markets, wheat's direction will be set by corn and soybeans.

 

"These markets will feed off each other, especially when there's money flow," he said.

 

Traders said there could be some profit-taking ahead of the weekend, but that it will be limited because of the market's uptrend.

 

The next downside price objective for the bears is pushing and closing July CBOT prices below solid technical support at US$6.00, a technical analyst said. The next upside price objective is to push and close July futures prices above solid technical resistance at this week's high of US$6.77 a bushel.

 

First resistance is seen at Thursday's high of US$6.42 3/4 and then at US$6.50, the technical analyst said. First support lies at US$6.25 and then at Thursday's low of US$6.14 1/4.