CBOT wheat futures higher

Wheat futures on the Chicago Board of Trade closed higher on Thursday as news of potential export demand from India and reminders of drought damage in Ukraine prompted short covering, traders said. Strength in corn and soybean futures lent support to wheat as well, although wheat prices settled below their session highs.
CBOT July wheat ended up 4-3/4 cents at $5.24-1/2 per bushel, after reaching $5.28-3/4. September closed up 6-3/4 cents at $5.41-1/4, with December up 6-3/4 at $5.54-1/4. Commodity funds bought 2,000 to 3,000 contracts, traders said.
Firms were rolling July positions forward, a factor that helped boost wheat futures volume to an estimated 94,780 contracts. The CBOT estimated wheat options volume at 11,844 lots.
India's farm minister, Sharad Pawar, said India will import 5 million tonnes of wheat between August and December to build up supplies. CBOT traders doubted that the United States would win much, if any, of the Indian business. Still, the purchase would draw down world supplies, which are already projected to tighten in 2007/08.
Anxiety about drought limiting wheat production in Ukraine added support. A Ukrainian consulting firm, UkrAgroConsult, cut its 2007 wheat crop forecast for Ukraine to 15.327 million tonnes, from 17.698 million previously.
"There has been almost no rainfall in southern Ukraine. The productive moisture content at the plough soil layer decreased to 0-5 mm in most districts of central and southern regions," UkrAgroConsult said in a statement.
"With dry air dominating that part of Ukraine, this has acutely worsened growing conditions for all crops."
Seasonal pressure from the expanding US winter wheat harvest limited the rally in wheat futures, along with ideas the market was technically overbought after hitting contract highs earlier this week. Forecasts called for improved harvest weather in the US Plains, including drier conditions, DTN Meteorlogix said.
In other news, Japan bought 80,000 tonnes of US and Canadian wheat overnight at its weekly tender but cancelled a purchase of 20,000 tonnes from Australia due to high prices.
Separately, India's state-run MMTC Ltd floated a tender to import 50,000 tonnes of wheat, with an option to buy an additional 50,000 tonnes. South Korea was seeking 23,900 tonnes of US wheat. Weekly export data had little market impact. USDA reported net export sales of US wheat last week at 347,700 tonnes, within the trade estimates for 300,000 to 400,000 tonnes. A total of 886,300 tonnes in sales were carried over from the 2006/07 marketing year which ended May 31.