December 30, 2005

 

US Wheat Outlook on Friday: Down 1-2 cents on technicals, exports, year-end

 

 

U.S. wheat futures were called to open down 1 cent to 2 cents per bushel on Friday on follow-through technical sales, year-end profit-taking after the recent rally, and disappointing weekly U.S. wheat export sales, brokers said.

 

U.S. wheat futures markets will close at noon CST Friday and will remain closed Monday in observance of the New Year's Day holiday.

 

Still, some traders noted losses could be limited by anticipation of long-only index fund buying early in 2006.

 

In the overnight e-CBOT session, most-active March wheat at the Chicago Board of Trade closed down 1 1/4 cents at US$3.36.

 

Key support was put at US$3.35 1/2 to US$3.33 per bushel, a technician said. On the upside, the contract needs to top Thursday's high at US$3.47 to reignite the bullish momentum, he said. Above that lies a key psychological objective at US$3.50.

 

Friday's weekly U.S. wheat export sales were at the low end of traders' estimates, traders noted.

 

The U.S. Department of Agriculture reported weekly U.S. wheat exports totaled 356,500 metric tonnes, at the low end of estimates ranging from 200,000 to 550,000 metric tonnes.

 

Overnight U.S. wheat export sales were quiet while the dollar was mixed Friday after hitting a two-week high Thursday against the yen. A stronger dollar is bearish for U.S. wheat exports.

 

U.S. spot cash wheat basis bids have weakened in the past week, leaving traders to wonder whether farmers will accelerate sales in the first few days of 2006.

 

Traders also continue to closely follow reports of crop progress across the dry southern U.S. hard red winter wheat belt. Unusually warm temperatures this week followed recent arctic air, both of which have prompted crop concerns.

 

Global wheat news was relatively quiet, with U.S. traders continuing to eye Australian and Argentine harvest progress.