November 13, 2009

 

US Wheat Outlook on Friday: 2-3 cents down; trade could be choppy, 2-sided

 

 

U.S. wheat futures are poised to start lower Friday on follow-through selling from the overnight session, but the markets could see another choppy, two-sided trade ahead of the weekend, traders said.

 

Chicago Board of Trade December wheat is called to open 2 cents to 3 cents per bushel lower. In overnight electronic trading, CBOT December wheat dipped 2 2/4 cents to US$5.29.

 

There is a lack of fresh fundamental news out for wheat, and trading is expected to be mostly quiet ahead of the weekend, a CBOT trader said. There could be some profit-taking after gains earlier in the week, an analyst said.

 

Traders will wait to see whether commodity funds return as buyers, the analyst said. Support from fund buying helped lift wheat earlier in the week. As of Thursday's close, CBOT December wheat was up 34 1/2 cents for the week.

 

"Bulls have the near-term technical advantage," a technical analyst said. "Prices have recently resumed a six-week-old uptrend on the daily bar chart."

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at this week's low of US$4.96 3/4, the technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$5.50, he said.

 

First resistance is seen at Thursday's high of US$5.41 3/4 and then at US$5.50, the technical analyst said. First support lies at Thursday's low of US$5.22 and then at US$5.19 1/2, he said.

 

Supportive fundamental news remains scarce. World supplies are considered ample, and demand has been lackluster.

 

Weekly U.S. wheat export sales of 412,200 tonnes were within trade expectations of 250,000 tonnes to 550,000 tonnes. They were nothing "startling," a CBOT trader said.

 

Export sales were up 45% from the previous week but down 5% from the prior four-week average, according to the U.S. Department of Agriculture. The USDA said "unknown destinations" bought 157,400 tonnes, while Nigeria bought 54,300 tonnes.

 

In other export news, Japan said it bought 97,000 tonnes of wheat in a routine tender, including 76,000 tonnes of U.S. wheat. It is expected to be delivered Dec. 21 to Jan. 20.

 

Looking ahead, traders will take a look Monday at how much winter wheat has been planted in the U.S. The USDA's weekly crop progress report showed that planting was 86% complete as of Nov. 8, below the average of 93%.

 

Planting of soft red winter wheat, traded at the U.S., was delayed by the slow corn and soybean harvests. Many producers in the Midwest and South plant SRW wheat after soybeans, but had to delay the soy harvest because of wet weather. Recent warmer, drier weather has allowed harvest to progress.