October 24, 2008


US Wheat Outlook on Friday: Slide called after equities drop overnight



U.S. wheat futures are expected to tumble Friday after equities futures plunged to exchange-imposed limits in overnight trading. Chicago Board of Trade December wheat is called to open 20 to 25 cents per bushel lower. In overnight electronic trading, CBOT December wheat dropped 20 cents to US$5.03.


Crude oil, another leading indicator for the grains, is also down, despite OPEC decision Friday to cut production by 1.5 million barrels of oil per day.


"Look for high volatility to continue and outside commodity markets to influence prices " said Ryan A. Kelbrants in a daily update from Benson Quinn Commodities. "The strong U.S. dollar and struggling U.S. export numbers should limit rallies. Fears over a global recession should also pressure commodity prices "


Bursting another major psychological support level at US$5 is the Wheat bears' next mission, a technical analyst said, noting first support lies at US$5.16, the pit's low for the week.


A "tepid, short-covering" rally in Thursday's trade hasn't erased the bear's near-term technical advantage, the analyst said.


Wheat bulls must close above "solid technical resistance" at US$5.79 - this week's high - with first resistance seen at Thursday's high of US$5.37 3/4, then at US$5.50, the analyst added. The Plains states should be mostly dry short a few lingering showers in the northeast, DTN Meteorlogix said.


Temperatures through Saturday should range from 32-75 degrees Fahrenheit, according to DTN.


Scattered showers across the Midwest are expected through the weekend with maybe a few flurries to the north on Sunday, the private weather forecasting firm said.


The weather is supportive of winter wheat planting and development, though progress is behind normal through thenorth Delta and some areas could use more rain, DTN said.


In global wheat trading news, Pakistan will issue a tender to import 750,000 metric tonnes of wheat, Agriculture Minster Nazar Mohammad Gondal said Friday.


"We will get 0.25 million tonnes of wheat from the U.S., and for the remaining 0.75 million tonnes, we will issue a tender in the next two weeks," Gondal told reporters.