Wheat futures on the Chicago Board of Trade closed higher on Wednesday, rebounding from Tuesday's declines, as a surge in the soy and energy markets triggered speculative buying, traders said. Wheat-specific news was lacking and trade was thin.
"There are no fresh fundamentals. Trade is pitiful ... But, when beans started to rally, we had no choice but to follow," one wheat trader said. Strength in crude oil and gold set the tone for grains. US crude prices rose more than $1 a barrel after a surprise cut in US crude inventories, and the Reuters/Jefferies CRB Index of 19 commodity futures rose 1.2 percent to close at 310.67.
CBOT March wheat ended up 7 cents at $4.66-1/2 per bushel, with most-active May up 5 at $4.78 and July up 4 cents at $4.89-1/2. Volume was light, estimated by the CBOT at 36,112 wheat futures and 6,465 options. Funds bought 3,000 contracts, traders said. Shatkin Arbor Inc was a late buyer of 200 May, lifting that contract close to its session high.
Expectations of a rebound in global wheat production for 2007/08 remained a bearish background factor. India's farm minister estimated the country's wheat output at 73.5 million tonnes, up 1 million from the previous estimate due to good weather.
However, an official with US Wheat Associates, an export marketing group, said India may have to import wheat for a second straight year to build up stocks, despite prospects for a bumper crop.
The US Department of Agriculture was scheduled to release updated US and world supply/demand estimates for the harvested 2006/07 crop on Friday. But analysts expected few changes for wheat. The average estimate among analysts surveyed by Reuters for US wheat ending stocks was 473 million bushels, nearly unchanged from USDA's February figure of 472 million.
Traders were looking ahead to March 30, when the USDA releases reports on US prospective plantings and quarterly grain stocks. Deliveries on the CBOT March contract remained heavy at 1,104 lots, underscoring weak cash markets for soft red winter wheat.
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