KCBT wheat futures mixed

Hard red winter wheat futures on the Kansas City Board of Trade closed mixed on Wednesday in highly volatile trade, with nearby contracts rallying to record highs near $14 a bushel after plunging in early moves, traders said.
Long liquidation and profit-taking pressured the market early, but that came to a halt at midmorning as Chicago Board of Trade wheat staged a sudden, sharp rebound.
Traders noted rumours that Kazakhstan might cancel sales of wheat, which would be bullish for US wheat futures. But given the big price swings, some traders hesitated to link the moves to fundamental factors.
KCBT March settled up 79-3/4 cents, or 6 percent, at $13.37 per bushel, after gyrating from a low of $11.56-1/2 to a contract high of $13.84-3/4. The May contract ended up 43 cents at $13.08 after setting a record high for the exchange at $13.95.
Volume was heavy at an estimated 34,434 contracts, up from 22,397 on Tuesday. Expanded daily trading limits and an increase in wheat margins at both the KCBT and the Chicago Board of Trade added to the volatility. The KCBT raised its initial speculative margin on all contracts to $5,625, from $3,750.
The daily limit widened to $1.35 for both KCBT and Chicago wheat, while the limit for Minneapolis Grain Exchange spring wheat was $2.02-1/2. MGE March continued to trade without limits.
The KCBT and the CBOT will lift limits on March wheat contracts starting on Thursday. There was bullish news that Iraq bought between 550,000 and 600,000 tonnes of US HRW wheat in the first major deals in nearly five months.
A trade official said the wheat is for April/May shipment, but some US traders speculated that the deal could involve new-crop wheat if delivery could be delayed until June. That idea limited the bullish impact of the news on nearby months.
Meanwhile, USDA through its daily reporting system confirmed a sale of 400,000 tonnes of US HRW wheat to Iraq for 2007/08. "Everybody is trying to figure out when they get it delivered. Probably not all the 500,000 to 600,000 will be old-crop. It's most likely some of it will be new-crop," said Jerry Gidel of North America Risk Management Services Inc in Chicago.
On the bearish side, Japan cancelled its weekly import tender this week due to high prices. In the southern US Plains hard red winter wheat belt, light precipitation was expected over the next several days, and there was no threat from cold weather, DTN Meteorlogix forecast.