Soft red winter wheat futures at the Chicago Board of Trade closed lower on Wednesday after rising to fresh multiyear highs, dragged down by a plunge in corn futures, traders said. However, wheat values bounced off their session lows toward the close.
"That's the sign of a bull market. I don't think the wheat market is done rallying. I think you're in the process of pulling world stocks down another notch," said Roy Huckabay, an analyst with the Linn Group in Chicago.
CBoT July wheat settled down 2-1/2 cents at $6.06 per bushel after trading in a wide range, from $5.97 up to a contract top of $6.25, the highest spot wheat price since 1996.
Deferreds ended down 4-1/2 to 11 cents, with December down 5-1/2 at $6.28-1/2. The front five months set contract highs before retreating. Funds sold about 4,000 wheat contracts, traders said.
Volume was heavy, estimated by the CBoT at 106,297 wheat futures and 14,128 options. Wheat faced pressure at midsession from the liquidation of long wheat/short corn spreads. The premium for December wheat over December corn rose to $2.70 a bushel, which was a popular target price, one floor trader said.
CBoT December corn ended down 13 cents, or 3.5 percent, at $3.62 per bushel, on improved weather forecasts for the US Midwest and fears that USDA might raise its corn acreage estimate in a plantings report on Friday.
A tightening global supply picture supported wheat futures earlier in the day. The US Department of Agriculture this month forecast that global wheat stocks would drop to 30-year lows by the end of the 2007/08 marketing year, and fresh reminders of supply-related problems continue to emerge.
French grain analyst Offre et Demande agricole on Wednesday cut its estimate of the French 2007 wheat harvest to 34.3 million tonnes, down 500,000, due to recent wet weather.
The market was still digesting a sharply lower Canadian wheat acreage figure issued by Statistics Canada on Tuesday.
And rain continued to disrupt the harvest in the southern US Plains, adding to concerns about the size and quality of the hard red winter wheat crop. Storms on Tuesday produced 0.5 inch to 1.5 inches of rain from north Texas into south-east Kansas, and more showers were forecast through Thursday, DTN Meteorlogix said.
Early market support also stemmed from news that Egypt bought 55,000 tonnes of US soft red winter wheat along with 60,000 tonnes of Russian wheat. And Iraq issued a new tender to buy 50,000 tonnes of hard wheat.
In other export news, Japan bought 110,000 tonnes of US, Canadian and Australian wheat at its weekly tender. A US Wheat Associates spokesman said the United States is not likely to bid on Indian wheat tenders due to stringent quality requirements. India this week tendered to buy 1 million tonnes of wheat.
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