CBoT wheat settles higher

Soft red winter wheat futures at the Chicago Board of Trade closed higher on Thursday but nearby contracts were choppy, retreating from early strength in spread-dominated trade, traders said. Front-month July wheat turned lower at times as firms sold Chicago wheat and bought Minneapolis Grain Exchange July spring wheat on inter-market spreads.
CBoT July wheat ended up 1 cent at $6.06 per bushel, trading in a wide range from a high of $6.18 overnight down to $5.92-1/4. Back months settled up 8 cents to down 2.
December set a contract high, while several other deferred months hit new highs overnight. Funds were even to small net buyers, traders said. Volume was on the heavy side at an estimated 85,939 wheat futures and 9,426 options.
In Minneapolis, July spring wheat ended up 14-3/4 cents at $6.05-1/4 per bushel.
CBoT wheat normally trades at a discount to the high-protein spring wheat futures traded in Minneapolis. But recent strength in CBoT wheat amid tightening world wheat supplies has inverted the relationship between the two markets.
The spread appeared to be correcting on Thursday, with Minneapolis wheat gaining back some ground against Chicago. Traders also bought Minneapolis December wheat against Kansas City.
MGE spring wheat got a big boost Thursday from a US Department of Agriculture announcement that exporters sold 160,000 tonnes of US spring wheat to an unknown destination for 2007/08. Concern about low protein in the US hard red winter wheat crop also bolstered Minneapolis.
"It's a grab for protein. People are well aware there is a disaster in the making in Oklahoma and they're concerned about Kansas quality," said Rich Feltes, research director for Man Global Research in Chicago.
"They're coming after the protein (top quality high protein) Minneapolis wheat to blend off with what they think is going to be a lower quality crop in the Southern Plains," Feltes said.
Bullish weekly export data supported values at all three markets. The US Department of Agriculture said 541,000 tonnes of US wheat sold for export last week, above trade estimates for 150,000 to 350,000 tonnes. Also supportive was Tunisia's snap tender for 117,000 tonnes of optional-origin milling wheat.
Concerns about tightening global wheat supplies continued to underpin values. Ukrainian consultants APK-Inform estimated Ukraine's 2007 wheat harvest at 12.747 million tonnes, down from a previous 14.1 million due to drought. Ukraine harvested 13.9 million tonnes of wheat last year.
Japan bought 48,500 tonnes of US and Canadian wheat at its weekly tender but passed on two cargoes, one Canadian and one Australian, due to high prices. Iraq is expected to face a severe shortage of wheat in the next two months as imports this year have fallen short and big new purchases have been delayed, traders said.