December 4, 2009

 

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

 

 

U.S. wheat futures are poised to start mixed to lower Friday as traders watch neighboring and outside markets for direction.

 

In overnight electronic trading, Chicago Board of Trade March wheat slipped 3/4 cent to US$5.70 3/4 per bushel.

 

Neighboring CBOT corn is called to open mixed, with soybeans seen starting slightly firmer. Wheat will be "looking to the beans and the corn for direction," according to a note from Country Hedging.

 

In outside markets, the U.S. dollar was firmer and gold was weaker, while crude oil was rising. A stronger dollar makes U.S. grain less attractive to foreign buyers.

 

Spot gold tumbled following much better-than-expected U.S. jobs data, as the dollar strengthened on signs of an improving economy. The jobs report showed U.S. employers cut 11,000 non-farm jobs in November, compared with an expected drop of 125,000 and following a revised reduction of 111,000 jobs in October.

 

CBOT March wheat closed weaker and near the session low Thursday on profit-taking and fund selling. Bulls still have the overall near-term technical advantage, but "are fading and do not want to see a bearish weekly low close Friday," a technical analyst said.

 

The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at last week's low of US$5.52, the technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at the November high of US$6.04 3/4, he said.

 

First resistance is seen at Thursday's high of US$5.82 and then at US$5.93, the technical analyst said. First support lies at Thursday's low of US$5.69 1/4 and then at US$5.60, he said.

 

There is a lack of fresh fundamental news out for the wheat markets, traders said. Export demand remains slow, as U.S. wheat is considered too expensive on the world market and there is a lot of competition for business.

 

Egypt's state-owned General Authority for Supply Commodities on Thursday bought 240,000 tonnes of Russian and German wheat in a tender Thursday and none from the U.S. Egypt is a major buyer on the world wheat market and is known for being price sensitive. Australia, meanwhile, is "again aggressively selling into Southeast Asia, despite a rising currency that makes its grain more expensive," according to a note from Farm Futures.