Spring wheat futures at the Minneapolis Grain Exchange closed limit-up in nearby months on Wednesday, roaring back from Tuesday's declines in step with a broad-based commodities rally, traders said. Minneapolis March spring wheat closed up the 30-cent limit at $10.37 per bushel, with May up 30 cents at $10.11.
The March/May spread last traded at an inverse of 30 cents, traders said. Front-month December, which expires on Friday, ended up 30 cents at $10.85, a new all-time high for the exchange. There were no deliveries on the contract, a bullish factor.
Wheat and other commodities such as crude oil drew strength from the US Federal Reserve and other key central banks launching co-ordinated steps to ease money market tensions. US crude oil futures soared more than $4, rising above $94 per barrel.
And the Reuters/Jefferies CRB Index, based on prices of a market basket of 19 commodities, ended 2 percent higher at 354.08. Also, investment bank Goldman Sachs raised its 2008 target price for wheat to $7.50 per bushel from the previous $6.00.
The firm raised its target prices for corn and soyabeans as well, feeding expectations of increased investment from index funds in commodities in 2008. Wheat had additional support from bullish fundamentals, including tight world wheat stocks and US. The US Department of Agriculture this week lowered its forecast of the US wheat carryout for 2007/08 to 280 million bushels, a 60-year low.
Traders also voiced concerns that US spring wheat acreage for 2008 might not rise enough to meet demand, setting the stage for continued shortages in 2008/09. "It's not going to go up enough to ease tight stocks," one Minneapolis trader said. Traders shrugged off news that Egypt bypassed US wheat and instead bought only 30,000 tonnes of Russian wheat at a snap tender.
Concerns about dry conditions in the southern US Plains winter wheat belt were easing after that key wheat region received its first significant moisture in weeks.
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