CBoT wheat futures climb three percent

Wheat futures at the Chicago Board of Trade soared 3 percent on Wednesday on rumours of fresh export demand and ideas that the US government would cut its US wheat production estimates, traders said. Wheat/corn spreading added support, traders said.
The rally came a day ahead of the US Department of Agriculture's July supply/demand report, which will include updated US and world wheat production forecasts. The average estimate for US wheat production among analysts surveyed by Reuters was 2.156 billion bushels, down from USDA's June estimate of 2.168 billion.
Wheat futures rallied on ideas the USDA might put out an even lower number due to acreage losses in the US winter wheat belt. "The trade averages on lower US wheat production, to a lot of people, don't really capture the extent of the disaster that has occurred down in Texas and Oklahoma," said Rich Feltes, research director for Man Global Research in Chicago.
CBoT September wheat contract rose 20-1/4 cents to close at $6.22 per bushel, breaking through resistance at its 20-day moving average of $6.07. December ended up 18-1/4 cents at $6.34 and back months were up 8 to 18-1/2 cents.
Spot July, which is in delivery, ended 19 cents higher at $6.11. Deliveries on the CBoT July contract totalled 245 lots, with Banc of America the main stopper of 224 lots. Funds bought 5,000 wheat contracts. Traders said cash interests also were buyers.
Volume was estimated by the CBoT at 83,980 wheat futures and 20,560 options. Along with the uncertainty about US wheat output, USDA could trim its estimate of world wheat ending stocks for 2007/08. The government in June projected the world wheat carryout at 112.03 million tonnes, a 30-year low.
Against that backdrop of tight global supplies, there were rumours that Iraq was seeking US wheat, and that India would tender to buy 1 million tonnes of wheat next week.
India this week said it would import 511,000 tonnes of wheat from a previous tender, about half of the 1 million tonnes of wheat it had sought. Also bullish was talk that Brazil may buy up to 1 million tonnes of US and Canadian wheat this year.
US weather was becoming less of a market factor for CBoT wheat futures, although traders were monitoring dry conditions in the northern US Plains spring wheat belt. Southern areas of the Plains winter wheat belt will see more showers over the next few days, which continue to stall the harvest in those areas, DTN Meteorlogix said.
However, combines have been progressing northward into Nebraska and South Dakota, where conditions should be mostly dry. Hedge-related selling stemming from the harvest in those states weighed on KCBT futures earlier this week. The harvest of soft red winter wheat was progressing well in the Midwest.