July wheat was trading 3 1/2 cents higher late in the overnight session. Outside market forces look mixed. With uncertainty on weather into early next week and possible difficulties for crops in Europe and former Soviet Union countries, there remains some underlying support. However, traders see a very large US crop “if” the crops can get through the next few weeks without cold weather damage. July wheat pushed from higher to lower on the session to close moderately lower on the day. “Less” fear of cold weather issues ahead plus ideas that the winter wheat crop yield potential is very high helped to pressure. The surge in soybeans, positive outside market forces and a surge higher in the stock market helped to support the strong opening. However, a lack of new buying interest and a push lower in corn sparked a fairly aggressive selling pace from fund traders and a moderately lower on the day trade in wheat into the mid-session. Less cold weather in the forecast for the eastern Corn Belt plus more rain in the forecast for the plains were seen as negative weather forces which helped to pressure. The market is beginning to view the May production report with an eye on big yield and production estimates for the winter wheat crop. Libya expected to import near 1 million tonnes in 2012. July Minneapolis wheat managed to close higher on the session after first trading down sharply to the lowest level since January 20th. The European Union granted export licenses for 224,000 tonnes of wheat this week which pushed the cumulative total for the year to 11.3 million tonnes as compared with 16.5 million tonnes last year. For the weekly export sales report, traders see US wheat sales near 525,000 tonnes from 442,200 tonnes last week. Iraq bought 300,000 tonnes of wheat overnight.
The market seems to be unwilling to count on a big yield just yet and Minneapolis price action yesterday (new lows and higher close) suggests significant support under the market for now. The outlook into mid-May still looks bearish without help from weather or outside market forces.
WHEAT (JUL): Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. The market’s short-term trend is positive on the close above the 9-day moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The next upside objective is 648 1/2. The next area of resistance is around 635 3/4 and 648 1/2, while 1st support hits today at 617 1/4 and below there at 611 1/4.
StockMarketNews Research Team