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CBOT wheat closes higher on technical bounce

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed higher on Tuesday on a technical bounce after the drop in prices Monday, traders said.

CBOT wheat closed 1 to 2 cents per bushel higher with March up 1-3/4 at $2.58.

Wheat fell Monday and was weighed down in early dealings Tuesday on a sharp drop in soybeans along with recent improved crop weather in the U.S. Great Plains hard red winter wheat region.

Support also came from expectations for business soon with Pakistan, traders said. Last week, U.S. wheat traders speculated that Pakistan would seek about 350,000 tonnes of U.S. wheat.

The talk circulated among CBOT wheat traders following news that Pakistan was set to import another 700,000 tonnes of wheat. A Pakistani agriculture ministry official said that total imports could rise to 3.5 million tonnes by June, when the fiscal year ends.

But gains in wheat were limited by the recent snowfall in the U.S. Great Plains which was seen buoying wheat crop conditions soon. However, there was a slight decline in condition ratings last week.

The latest six- to 10-day outlook from the National Weather Service projected normal temperatures and above-normal precipitation for western Kansas and the Texas and Oklahoma panhandles for Feb. 6-10.

Traders said exports remained routine and the demand picture for U.S. wheat failed to brighten following news a U.S. food aid package this year for Russia would total only 220,000 tonnes, far short of what Russia has requested.

In overnight export news, South Korean interests tendered to buy 20,700 tonnes of U.S. wheat on Wednesday.

Technically, declines Monday in CBOT wheat and other markets may have been overdone, traders said, and a rebound was warranted. March wheat fell 3-1/2 cents to $2.56-1/4, the contract's lowest close since $2.53-3/4 on Jan. 11.

Further price downside may we justified, technical analysts said, but support was seen around $2.55 and $2.52-2.53 in March.

Up to late trading, E.D. & F. Man International sold 400 March contracts, Merrill Lynch and Prudential Securities each sold 200 March and RJ O'Brien & Associates and Lee B. Stern each bought 200 March, floor sources said.

CBOT wheat futures volume was estimated by the CBOT at 17,000 lots, below the 22,257 lots traded Monday.

Wheat options volume was estimated at 3,000 lots.-Reuters