CBOT wheat futures rise nearly six percent

Wheat futures on the Chicago Board of Trade exploded higher on Wednesday, with front-month December rising the 30-cent-a-bushel daily trading limit to 10-year highs on a host of fundamental and technical factors, traders said.
News of sales of US wheat to Egypt and Iraq provided early support. Market talk of further reductions in the drought-hit Australian crop and possible limits on wheat exports from Ukraine added fuel to the rally, renewing concerns about tightening world wheat supplies.
"The world is uncovered. People don't own what they need," Linn Group analyst Roy Huckabay said. But wheat futures surged in the late in the session on technical buying and active spreading that lifted nearby months into buy-stops. Fund scrambled to buy nearby contracts against deferred months, exiting bear spreads.
"These spreads came to life again today, with people buying nearby December and selling July, and all kinds of bull spreads," Huckabay said.
Funds bought at least 10,000 wheat contracts, traders said.
CBOT December wheat closed up 25-1/2 cents, or 5.8 percent, at $4.65 a bushel, after climbing to $4.69-1/2, up the 30-cent limit and the highest spot wheat price in 10 years when viewed on a continuous chart.
Late in the session, December wheat climbed 31-1/2 cents to $4.71 on the CBOT's electronic trading platform - surpassing its 30-cent daily trading limit and shocking many veteran traders.
Traders said the aberration may have been connected to how spread orders were entered into the CBOT's e-system, but they were still unclear at the close how the market traded above its limit, a CBOT exchange trading rule. The CBOT was not immediately available for comment.
The market's early support focused on news that Egypt bought 115,000 tonnes of US soft red winter wheat at its latest tender, along with 60,000 tonnes of Canadian soft red wheat. Also, the US Agriculture Department confirmed that Iraq bought an additional 100,000 tonnes of US hard red winter wheat. The news followed confirmation on Tuesday that Iraq bought 200,000 tonnes of US HRW wheat.
Traders noted rumours that Iraq had bought an additional 400,000 tonnes of US wheat, including 200,000 tonnes each of hard red winter and hard red spring wheat. But that business has not been confirmed.
Cash markets were firm. Basis bids for soft red winter wheat tightened in some US Midwest locations early Wednesday, and CIF values for SRW wheat at the US Gulf firmed after news of the sale to Egypt.
Private forecaster Meteorlogix said rain was needed in Australia to prevent further yield declines for wheat, while more rain was also needed in the US Plains. Rainfall was noted on Wednesday in Argentina's wheat region, which would improve wheat prospects, Meteorlogix said.