US Wheat Outlook: Seen Up Slightly In Rebound From Slide

CHICAGO (Dow Jones)--U.S. wheat futures are poised to start firmer Friday in a bounce from Thursday's steep slide and with some spillover support seen from neighboring markets, traders said.

Chicago Board of Trade March wheat is called to open 2 cents to 3 cents per bushel higher. In overnight electronic trading, CBOT March wheat rose 2 3/4 cents to $5.21 1/4.

The markets could recover a bit after CBOT March wheat finished down 18 3/4 cents Thursday amid pressure from the rising U.S. dollar. The extent of a rebound Friday "may depend mostly on the direction of the dollar, instead of actual supply and demand fundamentals," Farm Futures said in a market comment.

The dollar was higher ahead of the opening of the grain markets but appeared to have "stabilized" somewhat after climbing Thursday, a CBOT trader said. A strong dollar is often seen as bearish because it reduces traders' appetite for risk and makes U.S. grain less attractive to foreign buyers.

Wheat also will keep an eye on the neighboring CBOT corn and soy markets for direction, traders said. The row crops moved a few cents higher overnight and will take a look at crop estimates expected from private analytical firm Informa Economics around 11:30 a.m. EST, a trader said.

"Wheat should follow corn and soybeans higher on the open, but futures are struggling to avoid a break to new lows after Thursday's slump," Farm Futures said.

Bears have the overall near-term technical advantage in wheat and gained more downside momentum Thursday, a technical analyst said. The next downside price objective for bears is pushing and closing CBOT March wheat below solid technical support at the November low of $5.07 1/2, he said. Bulls' next upside price objective is to push and close the contract above solid technical resistance at this week's high of $5.48, he said.

First resistance is seen at $5.25 and then at $5.30, the technical analyst said. First support lies at Thursday's low of $5.14 1/4 and then at $5.07 1/2, he said.

Wheat's supply and demand storyline remains unsupportive, as export demand remains sluggish, traders said. U.S. winter wheat plantings are thought to be down from last year, but U.S. and world ending stocks are ample, they said.

Recent snows in parts of western Kansas "have raised hopes for the US hard red winter wheat crop there, for snow cover is what the crop wants and needs at this time of the year," said Dennis Gartman, publisher of the Gartman Letter. HRW wheat, traded at the Kansas City Board of Trade, is used to make bread.

In India, wheat plantings as of Thursday were up 2.2% on the year to 23.1 million hectares, according to new government data. India is the world's second-largest wheat producer.

-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com

(END) Dow Jones Newswires
12-18-09 0926ET
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