US wheat futures closed higher on Tuesday as concerns about dry weather in Australia prompted light short covering, traders said. Australia's eastern wheat regions, which normally account for 30 percent of the country's crop, are unlikely to receive sufficient rainfall in the next week to trigger full-scale planting.
As a result of the dry conditions, Dutch bank Rabobank cut its forecast for Australia's 2008/09 wheat crop to 20 million to 24 million tonnes, from a previous forecast issued in April for 23 million to 26 million. Also bullish was rain in parts of the US Mississippi River Delta over the weekend that threatened to slow the early harvest of soft red winter wheat. Cash markets for SRW wheat firmed at the US Gulf in response.
US markets were closed on Monday for Memorial Day. At the Chicago Board of Trade, July soft red winter wheat settled 6-1/2 cents higher at $7.59 per bushel, with back months through 2009 up 6-1/2 to 12-1/2 cents. Funds were net buyers of 2,000 CBOT wheat contracts, traders said. Volume was thin, estimated at 35,509 wheat futures and 10,896 options.
At the Kansas City Board of Trade, July hard red winter wheat ended up 7-1/4 cents at $8.05 a bushel, with back months up 1 to 14 cents. At the Minneapolis Grain Exchange, July spring wheat closed up 15 cents at $10.45 a bushel, with back months up 15 to down 5 cents. Temperatures dipped below freezing in the northern US Plains spring wheat belt early Tuesday; more cold seen Wednesday.
Large speculators widened their net short position in CBOT wheat by 1,000 contracts to 21,613 lots as of May 20, the Commodity Futures Trading Commission reported late Friday. USDA said 15.217 million bushels of US wheat were inspected for export in the latest week, toward the low end of trade estimates for 15 million to 20 million.
After the markets closed, USDA said 47 percent of the US winter wheat crop was rated in good to excellent condition, up from 45 percent a week earlier. The crop's maturity remained behind normal, with 64 percent headed as of Sunday, compared with the five-year average of 76 percent.
USDA said the spring wheat crop was 76 percent emerged, near the five-year average of 78 percent. United Arab Emirates will buy 500,000 tonnes of wheat and donate it to Yemen. The US CCC on Friday said it sold 500,000 tonnes of US wheat from the Emerson Trust, including 300,000 tonnes of HRW wheat, to provide food aid to North Korea.