October 9, 2008


US Wheat Outlook on Thursday: 10-12 cents up on technical buys, positioning



Follow-through technical buying and ideas the markets are due for a bounce should carry U.S. wheat futures higher at the start of Thursday's day session, with position evening expected ahead of crop reports due out Friday.


Chicago Board of Trade December wheat is called to open 10 to 12 cents higher per bushel. In the overnight electronic trading session, CBOT December wheat gained 11 cents to US$6.19.


Wheat remains in an oversold condition after posting only modest gains Tuesday and Wednesday, an analyst said. The markets could feel spillover support from CBOT corn and soybeans, which are also called to start higher, he said.


"The grains look like they want to pop," a CBOT floor broker said.


Traders are waiting for the U.S. Department of Agriculture to issue its October supply/demand and crop production reports at 8:30 a.m. EDT Friday, although the report is less of an event for wheat than for corn and soybeans, a CBOT trader said. The agency is expected to trim its estimate for 2008-09 U.S. wheat carryout due to strong export demand and feed use.


There is still business being done in the world wheat market, with Jordan buying 150,000 metric tonnes of optional-origin wheat in a tender Thursday. The wheat was purchased on a cost and freight basis at the price of US$259 a tonne.


Total weekly U.S. wheat export sales of 565,800 tonnes were "solid" and at the high end of trade estimates, which ranged from 350,000 to 600,000 tonnes, a trader said. Sales of 512,000 metric tonnes for delivery in 2008-09 were down 22% from the previous week but unchanged from the prior four-week average, according to the USDA.


The wheat bears still have the solid near-term technical advantage, a technical analyst said. Prices are still in a six-month-old downtrend on the daily bar chart, he said.


The next downside price objective for the bears is pushing and closing CBOT December wheat below solid technical support at US$5.50, the technical analyst said. Bulls' next upside price objective is to push and close prices above solid technical resistance at US$6.50, he said.


First resistance is seen at today's high of US$6.19 1/2 and then at US$6.25. First support lies at US$6.00 and then at Wednesday's low of US$5.86 1/4.


In Australia, dry conditions in South Australia and western Victoria look to continue, DTN Meteorlogix said. There continues to be talk of damage to the wheat crop in West Australia due to a late September frost, the firm said. Otherwise, favorable conditions for wheat are seen in New South Wales and Queensland, it said.


Widespread showers and thunderstorms are expected in Argentina on Friday night and Saturday, Meteorlogix said. Rainfall will help to improve conditions for the growth of wheat and to recover from Wednesday's frost conditions, the firm said.

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