Soft red winter wheat futures at the Chicago Board of Trade closed higher on Wednesday in a rebound from Tuesday's sharp technical declines, traders said.
But trade was subdued as the market awaited the USDA's August crop production and supply/demand reports on Friday. Traders anticipated a decline in US wheat production and ending stocks due to drought in the Northern Plains spring wheat belt.
CBOT September settled up 4 cents at $3.88 per bushel, with December up 4 at $4.09-1/4. Deferred months were up 2-1/2 to 5-1/2 cents. Funds bought 1,600 contracts, traders said. Volume was estimated by the exchange at 73,593 futures and 7,578 options. Spreading added to the volume as traders continued to roll September positions forward.
An upturn in the Kansas City Board of Trade September wheat contract was supportive. The contract extended Tuesday's seven-week low, dipping to $4.68, before rallying to close at $4.71-1/2, up 1-3/4 cents. Declines in KCBT wheat had sparked a sell-off on Tuesday in Chicago and Minneapolis wheat.
Ahead of Friday's USDA report, the average estimate for US all-wheat production among analysts surveyed by Reuters was 1.762 billion bushels, below the July forecast for 1.806 billion and below last year's crop of 2.105 billion.
The consensus estimate for US 2006/07 wheat ending stocks was 410 million bushels, below USDA's July forecast for 438 million. Bearish factors for wheat futures included seasonal pressure from the fast-moving US spring wheat harvest and weak cash markets for soft red winter wheat. Basis bids for SRW softened in the Midwest early Wednesday on poor end-user demand and ample supplies.
Meanwhile, warm and mostly dry weather continued to favor harvest progress in the northern US Plains, despite a few showers, private forecaster Meteorlogix said. The USDA said the spring wheat crop was 49 percent harvested as of Sunday, well ahead of the five-year average of 17 percent. Overnight export business included news that Jordan rejected all offers on a 50,000-tonne wheat tender. And South Korea flour millers were seeking a total of 62,700 tonnes of wheat.
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