December 26, 2008
US Wheat Outlook on Friday: Futures Seen Higher, Following Corn And Soy
U.S. wheat futures are poised to follow corn and soybeans higher at the start of Friday's day session, although the markets could trade both sides in thin volume, analysts said.
Chicago Board of Trade March wheat is called to open 1 cent to 3 cents per bushel higher. There was no overnight electronic trading due to the Christmas holiday.
Expected gains in the neighboring CBOT corn and soy markets should help lift U.S. wheat futures, analysts said. Trading should be subdued as many market participants are staying home after the Christmas holiday Thursday, they said.
"I see a narrow trading range session today," said Larry Glenn, broker and analyst for Frontier Ag. "I bet by the end of the day, we'll be close to unchanged. We might trade both sides of it."
There could be some follow-through buying from gains in Wednesday's day session, traders said. Wheat set new December highs Wednesday, supported by strength in soybeans and a weaker dollar.
Technically, wheat looks as though it's gaining some upside momentum, analysts said. A bullish weekly high close Friday would provide the bulls with better upside near-term technical momentum, a technical analyst said.
The next downside price objective for the bears is pushing and closing CBOT March wheat below solid technical support at US$5.35, the technical analyst said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at US$6.00, he said.
First resistance is seen at Wednesday's high of US$5.85 1/4 and then at US$6.00. First support lies at Wednesday's low of US$5.72 1/2 and then at this week's low of US$5.53.
"Traders will have their eyes on confirming Wednesday's late gains today, with profit-taking possible if buying interest dries up and corn and soybean prices begin to slip," said Arlan Suderman, analyst for Farm Futures.
Export demand is not expected to be supportive. The U.S. Department of Agriculture said U.S. wheat export sales for the week ended Dec. 18 were 253,600 tonnes, down 3% from the previous week and 12% from the prior four-week average. Sales were toward the low end of analysts' estimates, which ranged from 200,000 tonnes to 500,000 tonnes.
Looking at the weather, there are no significant cold threats for hard red winter wheat in the U.S. central and southern Plains during the next seven days, DTN Meteorlogix said in a forecast. Warmer temperatures and rain will mostly favor soft red wheat in the eastern and southern Midwest and Delta regions during the next few days, the private weather firm said.