CBOT wheat closes higher

Wheat futures on the Chicago Board of Trade closed sharply higher in a shortened pre-holiday session on Wednesday, with new-crop July leading the way up on bear spreads, brokers said. "The enthusiasm is in new crop," one floor trader said.
The CBOT closed at noon CST (1800 GMT) and will remain closed on Thursday for the US Thanksgiving Day holiday. It will close at noon again on Friday. Bear spreading was the feature, with deferred contracts for new-crop wheat gaining on nearby, or old-crop, contracts. UBS Warburg spread 2,500 July/December, traders said.
New crop/old crop spreads were also noted in CBOT corn. December wheat settled up 6-1/2 cents, or 1.3 percent, at $4.86-1/4 a bushel. March was 4-1/2 cents at $5.06-1/4, while new-crop July climbed 12-1/2 cents, or 2.6 percent, to close at $4.87. Funds were net buyers of 2,000 lots, and Tenco was a late buyer of 900 July, traders said.
It was unclear whether the spreading represented new positions, or liquidation of existing long December/short July spreads. But one trader said it would be unusual for funds to put on a new December spread position, given that first notice day for December is little more than a week away on November 30.
The December contract built a huge premium against July last month on massive bull spreading that was triggered by tight world supplies of old-crop wheat and a drought in Australia. The December-July spread hit a premium of 87 cents on October 11, but has since eroded, closing on Wednesday at a 3/4-cent carry.
Options-related buying provided early support for wheat. Traders were positioning after the exercise of December $4.80 calls after their expiration on Tuesday, traders said. Short covering ahead of the holiday added support. News that Egypt bought 60,000 tonnes of US soft red winter wheat was bullish, although sales of US wheat continue to lag last year's pace. Egypt also bought 120,000 tonnes of French milling wheat at its latest tender.
Export activity overnight featured Japan buying 170,000 tonnes of wheat at its weekly tender, including 90,000 tonnes of US origin. South Korea set a tender for 21,200 tonnes of wheat. Syria sold 9,000 tonnes of soft milling wheat to Iraq and 5,000 tonnes of durum wheat to a buyer in Turkey in a tender that closed on Tuesday, European traders said.
Private forecaster Meteorlogix said warm and dry weather over the next five days in the US Plains hard red winter wheat belt would continue to deplete soil moisture. But some forecasting models predicted a better chance for rain in the region on Tuesday to Wednesday of next week.
Storms in China should bring 0.25 to 1 inch of rain to the Yangtze River Valley, but will mostly miss key wheat areas farther north, including Shandong and Henan provinces, Meteorlogix said.