September 12, 2008

CBOT eyes US$7/bushel for December wheat

December wheat futures at the Chicago Board of Trade on Thursday (September 11) hit a fresh 10-month low of US$7.14 a bushel. Since the Aug. 21 high of US$9.57, December wheat has dropped by around US$2.40 a bushel.

Bears have solid downside near-term technical momentum, and their next objective is to produce a close below major psychological support at US$7.00 a bushel.

Wheat prices have been trending lower for six months, since the contract and all-time high of US$12.84 1/4 posted in mid-March.

For the wheat bulls to begin to regain some upside near-term technical momentum, they would have to push and close December futures prices above strong psychological resistance at US$8.00 a bushel, which would also fill on the upside a downside price gap on the daily bar chart that was created on September 2.

A close below psychological support at US$7.00 would produce more serious technical damage and would also open the door to a quick move to chart support at the US$6.50 area, basis CBOT December soft red winter wheat futures.

Wheat traders will continue to look to the key "outside markets" for direction -- the value of the US dollar and crude oil prices. Both of those outside markets are in a bearish posture Thursday -- lower crude oil prices and a stronger US dollar.