US Wheat Outlook on Friday: Seen slightly up on spillover support

 

 

Chicago Board of Trade December wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT December wheat rose 2 3/4 cents to US$4.99 1/4.

 

Wheat will continue to look for leadership from neighboring CBOT corn and soybeans, which were both higher overnight, an analyst said. Wheat is technically oversold and due for a bounce but needs some support from other markets, he said.

 

A soft U.S. dollar is seen as supportive because it makes U.S. wheat more attractive to foreign buyers. Gains in crude oil and equities should lend additional strength, traders said.

 

"Wheat traded both sides lightly before following the strength in row crops and weakness in the U.S. dollar to secure gains by the end of the overnight session," Country Hedging said in a comment.

 

Statistics Canada did not do much to change the fundamental storyline for wheat, which has come under pressure from large global supplies, traders said. Statistics Canada estimated all-wheat production at 23.614 million tonnes, above the range of estimates of 20.1 million to 23.31 million.

 

The demand front looked mostly quiet for wheat. The markets need to see stronger demand in the form of big export sales to firm up, an analyst said.

 

"Exports remain the biggest weight on the market right now, thanks to competition from suppliers around the world," said Bryce Knorr, analyst for Farm Futures.

 

Crops in the Canadian Prairies should benefit from a return of warmer temperatures during the next few days, according to private weather firm DTN Meteorlogix. Showers and cooler temperatures on Sunday and Monday should be followed by a few more warm days through the middle of next week, the firm said in a forecast.

 

Warmer, drier weather during the next few days also will help to improve conditions for maturing spring wheat and the delayed harvest in the northern U.S. Plains, according to Meteorlogix.

 

In the Southern Hemisphere, wheat from northern New South Wales to Queensland needs moisture but it's not expected to see rain during the next seven days, Meteorlogix said. Drought continues to hurt wheat in Argentina, which should only see "a few light or very light showers" during the next seven days, according to the firm.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.50, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the July low of US$5.32 3/4, he said.

 

First resistance is seen at this week's high of US$5.08 3/4 and then at US$5.15. First support lies at the contract low of US$4.85 1/2 and then at US$4.75.