September 18, 2009

 

US Wheat Outlook on Friday: Mixed; outside markets limit upside

 

 

U.S. wheat futures are expected to open mixed on Friday following overnight action, with outside markets limiting any gains.

 

In overnight trade, December Chicago Board of Trade wheat was flat at US$4.61 3/4 per bushel and March wheat was up 1 cent to US$4.82 1/2.

 

A stronger dollar should put some pressure on wheat and commodities in general, traders said. Wheat will have additional pressure from corn and soybeans, as weather forecasts continue to lack any frost that would hurt those crops. The wheat market has been following corn and soybeans recently, analysts said.

 

Fundamentally the market has little news, analysts said. Large world supplies and lackluster export demand are bearish factors.

 

Farm Futures senior editor Bryce Knorr said in a commentary that "big buyers remain on the sidelines, preferring to take only modest quantities due to abundant stocks and the prospect for lower prices down the road.

 

He added that "red flags were also raised" by news that Brazil is testing recent U.S. shipments for vomitoxin.

 

The next downside price objective for the bears is pushing and closing CBOT December prices below solid technical support at US$4.25. Bulls' next upside price objective is to push and close December futures prices above solid technical resistance at US$5.00 a bushel.

 

First resistance is seen at Thursday's high of US$4.76 3/4 and then at this week's high of US$4.81 1/2. First support lies at Thursday's low of US$4.58 1/4 and then at the contract low of US$4.50.

 

In international news, India's wheat production in 2009-10 will likely reach 79 million metric tonnes, versus 80.58 million tonnes estimated a year earlier, according to the farm ministry Friday.

 

Also, England's 2009 wheat production is expected at 12.9 million metric tonnes, around 3 million tonnes lower than the previous year, according to figures from the National Farmers' Union published Friday.

 

Production estimates for Australia's new wheat crop remain in a range of 20 million-23 million metric tonnes, despite some experts believing output could sink to the lower level.