Wheat futures at the Chicago Board of Trade closed higher on Thursday on short-covering ahead of the USDA's long-awaited March plantings and quarterly stocks reports on Friday, traders said. Fund-driven strength in corn, soybeans and crude oil added support.
The Reuters/Jefferies CRB Index of 19 commodity prices hit a 3-1/2-month high as oil prices moved above $66 a barrel on Middle East tensions. CBOT May wheat settled 4-1/2 cents higher at $4.61 after buy-stops lifted the contract to $4.69, above its 20-day moving average at $4.66-1/2. July wheat ended up 3-3/4 cents at $4.75 and December was up 3-1/4 at $4.98-1/2.
Trade was choppy and volatile at times. Rand Financial bought 1,000 July contracts near midday, triggering buy-stops, but the market came off the day's highs by the closing bell. Funds were net buyers of 4,000 contracts. Traders also noted bullish moves in the wheat options pit, with Tenco a noted buyer of July calls. Volume was moderate, estimated by the CBOT at 49,755 wheat futures and 10,213 options.
CBOT wheat gained against Kansas City Board of Trade wheat on inter-market spreads. Ideal crop weather in the US Plains hard red winter wheat belt anchored prices in Kansas City.
KCBT May wheat settled up 1-3/4 cents at $4.72-1/4 after falling to a six-month low at $4.65-1/4. Technical factors also supported Chicago wheat against Kansas City. Funds hold a net short position in CBOT wheat, according to the latest Commodity Futures Trading Commission data, leaving the market open to short-covering. In Kansas City, funds hold a net long, so futures are vulnerable to long liquidation.
The wheat market had light support from bullish data in the US Agriculture Department's weekly export sales report. The government pegged US wheat sales at 636,500 tonnes (old and new crop), above trade estimates for 450,000 to 550,000 tonnes.
Traders continued to position ahead of Friday's USDA reports. The average trade estimate for March 1 US wheat stocks was 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. The consensus estimate of US all-wheat seedings for 2007 was 59.7 million acres, up from 57.3 million for 2006. The rise reflects an increase in winter wheat seedings last fall.