June 6, 2008

 

US Wheat Outlook on Friday: Up 3-5 cents, following CBOT corn, soybeans

 

 

U.S. wheat futures are poised to start Friday's day session firmer on spillover support from CBOT corn and soybeans, analysts 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 was up 4 1/2 cents at US$7.90.

 

Wheat is expected to keep looking at the neighboring markets for direction after following them sharply higher Thursday. There is a lack of other fresh news out for wheat, traders said.

 

Weather looks bullish for CBOT corn and soybeans amid concerns about slow planting and development of the row crops due to excessive moisture.

 

"They want to run, and we're going to follow," a CBOT wheat trader said about corn and soybeans.

 

Wheat could see some technical buying if the CBOT July contract climbs above the area around US$8, a floor trader said. The wheat markets could come under pressure if CBOT corn and soy see some pre-weekend profit-taking, he said.

 

The bulls' next upside price objective is to push and close CBOT July wheat above technical resistance at US$8, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$7.30 3/4, he said.

 

First resistance is seen at Thursday's high of US$7.86 1/4 and then at US$8.00. First support lies at US$7.65 and then at US$7.50.

 

Looking at the weather for wheat, thunderstorms, with locally heavy rain and severe weather, may impact portions of Nebraska and Kansas during the next five to seven days, DTN Meteorlogix said in a forecast. A hotter and drier pattern should continue for the west Texas region and southern Colorado for another five days before the areas see a chance for showers, the private weather firm said.

 

There appears to be a very active weather pattern in spring wheat areas of the northern Plains. Rain and storms appear likely well into next week, and any lingering concerns about the dryness in North Dakota should be eliminated, Meteorlogix said.

 

There is a good chance for significant rains in previously dry areas of South Australia, Victoria and New South Wales, Meteorlogix said. That should help ease concerns for early wheat growth.

 

The winter cropping season in South Australia is off to a mixed start with yield potential estimated near average, according to a monthly Crop Report issued Friday from the state's Department of Primary Industries & Resources. Following patchy rains in May, it is estimated seeding is about 60% complete, a crop consultant said.

 

Major wheat areas of southern Buenos Aires in Argentina are expected to stay mostly dry or receive only periodic light showers during the next 10 days. Rainfall is needed for favorable early growth of wheat.