July 25, 2008

 

US Wheat Outlook on Friday: Seen 2-4 cents up, following overnight tone

 

 

U.S. wheat futures are poised to start Friday's day session slightly firmer, with traders expected to continue covering short positions and unwinding long corn/short wheat spreads.

 

Chicago Board of Trade September wheat is called to open 2 to 4 cents per bushel higher. In overnight electronic trading, CBOT September wheat was up 3 1/4 cents at US$7.91, and CBOT December wheat rose 2 3/4 cents to US$8.14.

 

CBOT corn and soybeans also were higher overnight, as the markets rebounded from recent selling. The markets are technically oversold and due for more of a bounce, traders said.

 

Volume is not expected to be heavy in wheat amid a lack of fresh fundamental news, traders said. CBOT September wheat Thursday traded in a tight 12-cent range.

 

Bearish expectations for a record world wheat crop continue to hang over the markets and keep a lid on gains, traders said. Global wheat production in 2008-09 is projected at 664 million tonnes, up 53 million tonnes from 2007-08, according to the U.S. Department of Agriculture.

 

The Wheat Quality Council next week will hold its annual U.S. hard red spring wheat tour. Crop scouts will assess the condition of the crop throughout North Dakota, with some participants also venturing into parts of South Dakota, Montana and Minnesota to look at wheat.

 

Montana's wheat will come under "increasing stress" from periodic hot weather and only light showers, DTN Meteorlogix said in a forecast. Periodic shower activity and "not very hot weather" will favor wheat through central and eastern areas of the U.S. northern Plains, the private weather firm said.

 

Conditions in Australia's wheat areas appear to be improving after drought slashed production Down Under for the past two years, a trader said. The West Australia wheat belt will continue to benefit from frequent episodes of showers and rain during the next week or more, according to Meteorlogix.

 

In Argentina, major wheat areas of La Pampa and southwest Buenos Aires are still in need of rain to recharge soil moisture for spring growth, Meteorlogix said. There is no significant rain in the forecast for the areas during the next five to seven days, the private weather firm said.

 

The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$7.68, a technical analyst said. Bulls' next upside price objective is to push and close December futures prices above solid technical resistance at US$8.50, he said.

 

First resistance is seen at Thursday's high of US$8.17 1/2 and then at this week's high of US$8.26 1/2. First support lies at this week's low of US$7.98 and then at US$7.82 3/4.