CBOT wheat higher

Wheat futures at the Chicago Board of Trade closed sharply higher on Wednesday, hitting the highest spot price in 11 years on speculative buying tied to tight world supplies and bullish technical signals, traders said.
Led by an early jump in Kansas City Board of Trade wheat, CBOT wheat hit life-of contract highs for the third straight day. Nearby contracts at both markets rose the 30-cent daily trading limit at times. CBOT July wheat settled up 24-1/2 cents, or 4.3 percent, at $5.89-1/2, after rising to $5.95, the highest price for front-month wheat since the spring of 1996.
Deferred contracts were up 7 to 24-3/4 cents, with December up 19-1/2 at $6.13. Commodity funds bought 7,000 to 8,000 contracts, traders said. Spread-related trade boosted volume as index funds and other firms rolled July positions forward.
Wheat volume was estimated by the CBOT at 154,711 futures and 22,619 options. If confirmed in official data on Thursday, the futures figure would be among the 10 highest single-day volume totals for CBOT wheat. Fundamentally, wheat production concerns centered on Ukraine and Russia, which have been hit with drought, and the United States, where rains in the Plains have disrupted the early harvest of hard red winter wheat.
"Especially where most of the harvest is concentrated right now in Texas and Oklahoma, they are going to be in and out of showers at least through the weekend," DTN Meteorlogix forecaster Mike Palmerino said. The market was also reacting to a US Department of Agriculture report issued Monday that projected global wheat ending stocks to drop to 112.03 million tonnes by the end of 2007/08, the lowest level since 1977/78 - leaving little room for production shortfalls.
"The world wheat stocks position being the lowest since the 1970s is important. When you combine that with crop losses in the US and Ukraine, and a few other areas, you end up with a very spicy market," said Dan Basse, president of AgResource Co in Chicago.
News that India will tender for 2 million tonnes of wheat by the end of June added support. In other export news, Brazil bought three cargoes of western Canadian wheat totalling 80,000 tonnes, the Canadian Wheat Board said. US exporters were expected to raise the price of wheat they offered to sell Iraq following rallies this week. US hard red winter wheat now costs about $250 to $255 per tonne FOB to a high-risk destination such as Iraq, US traders said.
At the end of May, Iraq was offered US and Canadian wheat at about $225 per tonne FOB, said grain trade sources in Jordan. "No one is offering that price any more," a US wheat trader said.
France's crops office, ONIGC, estimated France's 2006/07 ending stocks of soft wheat at 2.15 million tonnes, up from 2.12 million in May but down 23 percent from last year. The agency said the rise from last month was mainly due to lower-than-expected wheat exports.
The CBOT July wheat contract stayed well above all key moving averages. The nine-day relative strength index stood at 80 ahead of the open and climbed to 85 at the close, moving farther into overbought technical territory.