CBOT wheat sharply higher

Soft red winter wheat futures at the Chicago Board of Trade closed sharply higher on Wednesday as worries about a frost threat to US winter wheat this weekend sparked speculative buying, traders said.
Corn prices also surged. Both corn and wheat were seen as technically oversold and due for recovery after the steep, fund-driven declines that followed the USDA's March 30 US plantings forecast.
Commodity funds on Wednesday were net buyers of 3,000 wheat and 8,000 corn contracts, traders said. "We got overextended to the downside. Once that selling was exhausted, the path of least resistance was up," Iowa Grain analyst Gavin Maguire said.
May wheat settled up 12-1/4 cents, or 2.9 percent, at $4.31-1/4 per bushel, after backing off its session high of $4.37-1/4. July ended up 11-1/4 at $4.46 and December was up 10 at $4.72-1/2.
May corn closed up 13 cents at $3.59-1/4. Volume was estimated by the CBOT at 75,687 wheat futures and 11,274 options. Cold temperatures this weekend pose a threat to some of the soft red winter wheat in the Mississippi River Delta that has reached the heading stage, DTN Meteorlogix forecaster Mike Palmerino said.
USDA this week said 14 percent of the Arkansas wheat crop was headed. Jointing wheat in north-central Oklahoma and south-central Kansas was also at risk to the cold.
"It looks like you could get the freezing line clear down into north central Texas, toward Wichita Falls," Palmerino said. In export news, Iraq issued a tender for 50,000 tonnes of US and/or Canadian wheat.
Tunisia bought only 25,000 tonnes of soft milling wheat after tendering for 92,000 tonnes. India raised its 2007 wheat production estimate to 73.70 million tonnes, up just over 1 million tonnes. India harvested 69.48 million tonnes last year.
A Chinese government think tank forecast China's winter wheat output to decline to 94 million tonnes because of drought, down from 98.7 million tonnes last year.
The CBOT May wheat contract stayed below all key moving averages. The nine-day relative strength index was in oversold territory ahead of the open at 20, rising to 34 by the close. Technical traders view an RSI of 30 or lower as an oversold signal.