July 31, 2009

 

US Wheat Outlook on Friday: Up 3-4 cents on follow-through, corn, soy

 

 

U.S. wheat futures are expected to open higher Friday following overnight gains with firm corn and soybeans lending support, traders said.

 

Chicago Board of Trade wheat is called 3 to 4 cents higher. In overnight trade, September CBOT wheat was up 4 1/4 cents to US$5.20 1/2 per bushel and December wheat was up 4 1/4 cents to US$5.48.

 

Bulls will look to extend Thursday's modest gains, which came on the back of supportive outside markets, particularly a surge in soybeans.

 

Wheat is "the weak link on the floor," a trader said, as Thursday's gains were seen as unimpressive.

 

"The fact that wheat could post only tepid gains Thursday, when the other grains rallied sharply and the outside markets were fully bullish, is just one more bearish clue for this market," technical analyst Jim Wyckoff said.

 

The crop Benson Quinn Commodities analyst Dave Lehl said in a market commentary that wheat is vulnerable to short-covering rallies on oversold conditions, but that "large global stocks and the potential for a very good US spring wheat crop and a lack of production issues form other wheat producing countries should limit rallies."

 

A spring wheat tour concluded Thursday confirmed the crop's strong potential, traders said.

 

The Wheat Quality Council Hard Spring & Durum Wheat Tour on Thursday calculated the average 2009 hard red spring wheat yield at 46.2 bushels per acre, up from the 2008 average of 37.7 bushels.

 

The average durum yield was estimated at 36.2 bushels/acre, above the 23.7 bushels predicted the previous year.

 

"There are no issues with this crop, except harvest," said Ben Handcock, executive vice president of the Wheat Quality Council.

 

Traders and analysts also note there are few if any problems with crops around the world.

 

Although stronger weekly export sales were reported Thursday, traders and analysts say the demand picture for wheat remains weak.

 

The next downside price objective for the bears is pushing and closing December prices below major psychological support at US$5.00, Wyckoff said. The next upside price objective is to push and close July futures prices above solid technical resistance at the July high of US$5.80 a bushel.

 

First resistance is seen at Thursday's high of US$5.54 1/2 and then at US$5.60, Wyckoff said. First support lies at Thursday's low of US$5.39 and then at this week's low of US$5.32 3/4.

 

In international news, European Union licenses to export soft wheat increased 440,000 metric tonnes for the week ended July 28, E.U. data showed Friday.