Wheat futures on the Chicago Board of Trade closed nearly 3 percent higher on Wednesday, rebounding from a profit-taking sell-off on Tuesday as corn prices climbed to fresh 10-year highs, traders said. Wheat had added support from ideas that commodity index funds had finished selling wheat as part of a week-long rebalancing of their assets.
Index funds did sell corn late in the session, a factor that pushed corn prices off their highs. March wheat settled up 13 cents, or 2.8 percent, at $4.77 per bushel, with deferred months up 6 to 11-1/2 cents. The March contract was rangebound between support at its 200-day moving average of $4.54-1/2 and resistance at the 100-day MA of $4.83. Trend-following funds were net buyers of 4,000 wheat contracts. Calyon Financial was a noted late buyer of 800 to 1,000 lots, floor traders said.
Volume was moderate, estimated by the CBOT at 66,774 wheat futures and 9,140 options. March corn closed up 5 cents at $4.08 per bushel after reaching $4.20-1/2 at midday, the highest spot corn price in a decade.
Inter-market spreading supported wheat, with traders buying December wheat against December corn at $1.09 to $1.12, premium wheat. The surge in the corn market allowed traders to ignore weak fundamentals in wheat, including poor export demand, a rising US wheat stockpile and increased plantings for 2007/08.
The USDA on Friday raised the US 2006/07 wheat carryout to 472 million bushels, from 438 million in December. Weather conditions were generally favourable in the US Plains winter wheat belt. The current cold snap was not viewed as a threat, but there were some concerns about ice smothering the crop. In overnight export news, Bangladesh issued a tender to import 175,000 tonnes of wheat.
Argentina's Agriculture Secretariat left its estimate for 2006/07 wheat production unchanged at 13.7 million tonnes. The USDA has projected the Argentine crop at 14.2 million tonnes. Winter wheat seedings in Germany are down 2.1 percent from a year ago at 2.99 million hectares, the German government said.
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