November 6, 2009

 

US Wheat Outlook on Friday: Seen mixed, watching other markets

 

 

U.S. wheat futures are expected to start mixed Friday after rising slightly overnight amid an absence of fresh news.

 

In overnight electronic trading, Chicago Board of Trade December wheat gained 1 1/4 cents to US$5.13 1/2 per bushel.

 

The fundamental storyline remains unfriendly for U.S. wheat, as world supplies are large and export demand has been sluggish, said Brian Hoops, president of Midwest Market Solutions. Weekly U.S. wheat export sales, issued Thursday, were below expectations, and the U.S. lost out on a tender to Egypt.

 

"You have these huge world stocks out there," Hoops said.

 

Wheat will likely keep an eye on CBOT corn and soybeans during the session, he said. The row crops were mixed overnight but are called to start the day session on the defensive.

 

Weather looks favorable for the U.S. corn and soybean harvests and for soft red winter wheat planting. Many producers plant SRW wheat after soybeans in the Midwest and south, but producers have not been able to harvest soybeans because of wet weather. It is a "little bit of a negative" for the wheat futures that planting is picking up speed, Hoops said.

 

Wheat finished lower Thursday but has traded both sides this week amid a lack of fresh fundamentals, a trader said. Traders will keep an watch outside markets, with crude oil prices falling ahead of the opening. The markets are digesting a higher-than-expected rise in U.S. unemployment, up at its highest levels in 26 years.

 

"We've been consolidating for a couple of days," FuturesTechs said about CBOT wheat in a market comment. "The important point for the bulls is that US$5.05 is still in the support column. As long as this remains the case, we can have a dip-buying bias, with upside targets at US$5.36 3/4 and US$5.58 1/2."

 

Bulls and bears are on a level near-term technical playing field, a technical analyst said. However, a bearish weekly low close on Friday would provide the bears with fresh downside near-term technical momentum, he said.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$4.80, the technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.40, he said.

 

First resistance is seen at Thursday's high of US$5.21 1/4 and then at this week's high of US$5.28 1/4, the analyst said. First support lies at Thursday's low of US$5.10 3/4 and then at US$5.00, he said.

 

In other news, Rabobank Australia held its estimate for Australia's wheat crop unchanged at 22.8 million tonnes and said there is "some potential for upward revisions if the harvest remains broadly trouble free." The U.S. Department of Agriculture last month pegged production at 23.5 million.