Soft red winter wheat futures at the Chicago Board of Trade were up sharply past midday on Wednesday, with nearby months at times rising the 30-cent daily trading limit, on US supply concerns, traders said.
As of 12:35 pm CDT (1735 GMT), July wheat was up 27 cents, or 4.7 percent, at $6.08 per bushel, after reaching $6.11. Back months were up 8 to 27-1/2 cents. Funds bought 4,000 contracts by midday, traders said. The surge, which erased all of Tuesday's steep declines, was due to a mix of supply- and demand-driven factors, analysts said.
Persistent rains continue to cause problems in the southern US Plains, where farmers are struggling to harvest hard red winter wheat. Showers soaked the area on Tuesday, generating 0.5 to 2 inches of rain in areas that were already saturated.
"This rally is all on the damage to wheat," said Roy Huckabay, an analyst with the Linn Group in Chicago. Signs of rising demand for US wheat on the world market also helped lift futures. Iraq sought to import 350,000 tonnes of wheat flour in a move to help ease shortages while talks to buy large shipments of wheat were stalled.
"Iraq is bidding for flour. That tells you they are down to fumes on wheat coverage," Fortis Clearing Americas analyst Charlie Sernatinger said. And Egypt, another key wheat buyer, approved the expenditure of 2 billion Egyptian pounds ($351 million) by the country's main wheat buyer, the General Authority for Supply Commodities, due to high global commodity prices.