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CBOT wheat ends up on short covering, dry weather

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed higher Monday on speculative short covering and on persistent concerns about dry weather in the U.S. Great Plains hard red winter wheat region, traders said.

CBOT wheat closed 1-1/2 to 3 cents higher with March up 1-3/4 at $2.53-1/2.

Weather Services Corp. early Monday reported the U.S. winter wheat crop was mostly dormant but said the crop may suffer come springtime due to below normal soil moisture. There is a lack of protective snow cover in the region, WSC said. However no damaging cold is in sight, according to WSC.

"I didn't see anything new in wheat, just the dryness thing, and soyabeans didn't break as hard as some thought so that brought in a little short covering," a trader said.

Wheat fell early Monday on a decline in soyabeans that was linked to forecasts for rainfall this week in the dry soyabean growing region of southern Brazil. But soyabeans remained more buoyant than some were expecting which limited selling interest in CBOT grain and soya commodity futures prices.

Traders said some of the short covering was tied to position squaring before the release at 7:30 a.m. CST Wednesday of the U.S. Department of Agriculture's final report on 1999 crops. An average of analysts' estimates pegged the 2000 U.S. winter wheat acreage at 42.974 million acres, below the 1999 USDA figure of 43.425 million. Analysts also pegged U.S. wheat stocks as of December 1 at 1.939 billion, above the 1.896 billion on December 1, 1998.

But wheat continued to struggle under the weight of the large stocks of wheat and routine demand for U.S. wheat from world importers.

The U.S. Department of Agriculture's weekly inspections report listed wheat inspected for export for the week ended January 6 at 14.824 million bushels, at the low end of a range of estimates for 14.0 million to 21.0 million bushels. The total also was down from 16.106 million the previous week and 16.479 million a year earlier.

In late dealings, Cargill Inc. sold 400 March.

On the day, E.D. and F. Man International bought 800 March, Salomon Smith Barney bought 300 March, Carr Futures bought 400 March and O'Connor and Co. bought 500 March.

CBOT wheat futures volume was estimated by the CBOT at 23,000 lots, above the 20,713 lots traded Friday.

Wheat options volume was estimated at 7,500 lots.

-Reuters