CBOT wheat futures up

Wheat futures at the Chicago Board of Trade closed higher on Wednesday as firms covered short positions and aligned themselves ahead of key US government crop data at week's end, traders said. Wheat is the only CBOT grain market in which funds are believed to hold a net short position. Funds are net long in corn, soybeans and soy products.
CBOT May wheat closed 2-1/2 cents higher at $4.56-1/2 per bushel, with July up 3-1/4 at $4.71-1/4 and December up 3-1/2 at $4.95-1/4. Funds bought 1,000 contracts, traders said. The US Department of Agriculture was set to release its March planting intentions and quarterly grain stocks reports on Friday. The market has eagerly awaited the acreage data amid widespread expectations for a jump in corn seedings.
The USDA's figures should help set the direction of the corn futures market and, in turn, the wheat market. The government's stocks report will gauge domestic use of wheat, corn and soy over the past three months, and could show whether soaring US corn prices are prompting livestock producers to substitute more wheat in their rations.
For March 1 US wheat stocks, the average estimate among analysts surveyed by Reuters was for 881 million bushels, compared with 1.315 billion on December 1 and 972 million a year ago. The average analyst estimate for US spring wheat seedings was 13.588 million acres, down from 14.899 million in 2006.
CBOT wheat drew support from inter-market wheat spreads, with traders exiting long Kansas City/short Chicago positions. "Some of the spreads have run their course, and people are taking profits," Prudential Financial analyst Shawn McCambridge said.
He also noted the potential for concerns about the Midwest soft red wheat crop, after poor weather last fall and a wet start to the spring. Meanwhile, hard red winter wheat in the US Plains is thriving, with 72 percent of the crop in top producer Kansas rated good to excellent. That factor has pressured Kansas City wheat futures this week.
Strength in the crude oil market was supportive for the broader commodities sector. Increased tensions between Iran and the West lifted US crude prices above $64 a barrel, and the Reuters/Jefferies CRB Index of 19 commodity futures reached a four-week high at 316.23. In wheat export news, South Korea bought 20,400 tonnes of US wheat, but it passed on a tender to buy another 20,000 tonnes due to high prices. Taiwan millers will seek US wheat on Friday. Ukraine is considering lifting wheat export restrictions for 2006/07 season.