April 7, 2006

 

US Wheat Outlook on Friday: Down 1-2 cents on late-week profit-taking

 

 

U.S. wheat futures were called to open down 1-2 cents per bushel Friday on profit-taking after Thursday's rally on concerns about the Southern Plains hard red winter wheat crop and speculative buying, brokers said.

 

Kansas City Board of Trade HRW wheat prices sagged Monday and Tuesday ahead of expected Southern Plains rains. However, this week's storm tracked northeast of the driest fields, prompting a rally in KCBT prices to 3-week highs Thursday, noted Tim Hannagan, a grain analyst at Alaron Trading.

 

Subsequently, he expected some profit-taking in U.S. wheat futures Friday and some pressure from pre-weekend profit-taking in outside commodity markets including gold and crude oil.

 

"When they (traders) come in on Monday, they may trade the USDA carryover stocks, they will trade the weather," he added. "We're going to make and break this (hard red winter) crop between now and May 11. So, we're going to be trading weather every single day."

 

The U.S. Department of Agriculture is scheduled to release a monthly supply and demand report early Monday. Analysts expect the government to slightly lower its 2005-06 U.S. wheat ending stocks estimate to 534 million bushels from last month's estimate of 542 million.

 

In the overnight e-CBOT session, most-active May wheat at the Chicago Board of Trade ended down 1 1/4 cents at $3.51 1/4 after making a 3-week high Thursday and closing in the middle of the day's trading range. July closed down 2 cents at $3.64 per bushel.

 

"Prices Thursday saw a bullish upside 'breakout' from a recent sideways trading range, amid renewed weather worries about dry and hot conditions returning to the U.S. Plains states," said a technical source.

 

"It will take a close back above resistance at Thursday's high of $3.56 1/2 to provide the bulls with better upside technical momentum."

 

First resistance for CBOT May wheat was seen at $3.56 1/2 - Thursday's high - and then at $3.60. First support was seen at $3.49 1/2 - Thursday's low-and then at $3.47 1/2 -the bottom of Thursday's upside price gap.

 

In overnight trade, KCBT May settled down 3 3/4 cents at $4.27 1/4 and KCBT July closed down 3 cents at $4.33 per bushel.

 

"Bulls have regained good upside technical momentum, amid rekindled worries about a weather market in wheat due to dry and hot conditions forecast for the Plains states," said the technical source of KCBT May wheat. "A close below this week's low of $4.13 would provide the bears with some fresh downside technical momentum."

 

First resistance for KCBT May was seen at $4.33 - Thursday's high - and then at $4.40. First support was seen at $4.27 1/2 - Thursday's low - and then at $4.22 1/2 - the bottom of Thursday's price gap.

 

Cash U.S. hard red winter wheat basis bids were mostly steady Friday except for a 5-cent loss in Portland, Ore., on and a 7-cent gain in Ponca City, Okla.; soft red winter wheat basis bids were mixed, with a 3-cent loss in Evansville, Ind., and a 10-cent gain in Chicago; and spring wheat basis bids were steady to weak, grain merchandisers said.

 

U.S. wheat export sales and global wheat news were quiet.