October 2, 2009

 

US Wheat Outlook on Friday: Seen weaker on follow-through selling

 

 

Follow-through selling and a lack of supportive fundamental news are expected to weigh on U.S. wheat futures at the start of Friday's day session.

 

Chicago Board of Trade December wheat is called to open 3 cents to 5 cents per bushel lower. In overnight electronic trading, CBOT December wheat stumbled 5 cents to US$4.47 3/4.

 

Wheat remains range bound, and extended losses overnight after dipping Thursday, traders said. Weakness in crude oil and expected losses in CBOT corn and soybeans should contribute to a continued bearish tone, they said. Fundamentals are well known, with world supplies considered large.

 

Statistics Canada raised its estimate for all-wheat production to 24.58 million metric tonnes from its September estimate of 23.614 million. An increase was expected, but the estimate came in below pre-report trade estimates, which ranged from 25 million to 27 million bushels.

 

Seasonally colder conditions in the Canadian prairies means most areas will probably see an end to the growing season within the next five to seven days, if they haven't already, according to private weather firm DTN Meteorlogix. Harvest weather looks mostly good, the firm said in a forecast.

 

The U.S. Department of Agriculture's National Agricultural Statistics Service said it may release updated acreage, yield, production and stocks estimates for durum and other spring wheat in the Nov. 10 crop production report. Previous estimates were included in the Sept. 30 small grains report, but a large portion of acreage was not harvested yet in key states. The additional surveys are not expected to provide a large change in U.S. spring wheat yields, according to AgResource Company.

 

In the central and southern Plains, periodic showers will favor germination and early growth of hard red winter wheat, while intervals of drier and warmer conditions should allow for good planting progress, Meteorlogix said.

 

In the Southern Hemisphere, drier, warmer weather during the next few days will favor developing wheat after recent rains, Meteorlogix said. The next chance for showers appears early next week and is mostly for the northern and eastern belt, the firm said.

 

Dryness continues to impact filling wheat in Australia's northern New South Wales and southern Queensland. There is no significant rain forecast for this area, but showers through southeast Australia will favor reproductive to filling wheat, according to Meteorlogix.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.25, a technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.00, he said.

 

First resistance is seen at US$4.60 and then at US$4.75, the technical analyst said. First support lies at Thursday's low of US$4.45 1/2 and then at the contract low of US$4.39 1/2, he said.