20000206

CBOT wheat closes higher on short covering

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed higher Friday on short covering after an early fall to a four-week low, traders said.

CBOT wheat closed 3 to 4-1/2 cents higher, with March up 3-1/4 at $2.57.

"It just got way short the past couple of days and they covered," a trader said. "No one wanted to be short over the weekend."

Some said the market rebounded following news the USDA would amend its loan deficiency payment programme to prevent producers from unfairly enlarging their payments. USDA planned to eliminate the ability of some producers to lock in prices in their home area while moving grain to ports and claiming a higher loan rate there.

Wheat was pressured early by improved crop prospects for U.S. wheat and a bearish export outlook tied to news that Pakistan does not intend to import wheat anytime soon.

Nearby March fell to a session low of $2.49 per bushel early, a four-week low and the lowest level for that contract since Jan. 10.

Pakistan's Agriculture Minister Shafqat Jamote said Friday the government had no plans to import any more wheat in the fiscal year that ends in June, despite approval to import 700,000 tonnes.

The news ran contrary to trade expectations earlier this week that Pakistan was about to tender for some 350,000 tonnes of wheat.

Jamote said wheat imports would be confined to the 1.6 million tonnes that had already been imported or were in the pipeline.

In the United States, snowfall last week in the central and southern Plains provided some moisture relief to parched winter wheat ground, though much more was needed. The chance of precipitation in Kansas, the leading U.S. wheat state, had improved for next week.

Chicago trading firm RJ O'Brien & Associates said that based on technical studies, March wheat was poised for a test of support at $2.48. Closing below that level "would set up the potential for a decline to the $2.28 area," the firm said in a report Friday. "Resistance is strong at $2.60."

E.D. & F. Man International bought 500 March contracts, FIMAT Futures Inc. bought 200 March and 300 May, RJ O'Brien & Associates, Refco Inc. and Merrill Lynch each bought 200 March and O'Connor & Co. sold 600 March, floor sources said.

CBOT wheat futures volume was estimated by the CBOT at 26,000 lots, above the 25,730 lots traded Thursday.

Wheat options volume was estimated at 9,000 lots.-Reuters