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CBOT wheat ends up near 2-1/2 week high on weather

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed higher Tuesday, ending near a 2-1/2-week high, on follow-through technical gains from Monday's rally and sustained concerns over weather in the US wheat belt, traders said.

CBOT wheat closed 5-3/4 to 8 cents higher with May up 7-1/2 at $2.71. May reached a session high of $2.71-3/4, the highest level for that month since $2.72-1/2 was notched on February 25.

Traders cited technical advances in wheat with buy-stops hit when May early broke through first resistance at $2.64-3/4. Second resistance was at $2.68, a level penetrated in later dealings touching off another flurry of buy-stops.

"A lot of this is technical and it's mostly small-lot commission house and local trade. There wasn't a lot of fund buying," said Ben George, trading specialist for LFG.

Fundamental traders continued to cite the uncertain weather and vulnerable condition of the US winter wheat crop.

An unseasonably warm and dry winter in the United States has sparked concerns over the prospects of hot and dry summer weather, which could trim US production.

According to the Texas Agricultural Statistics Service on Monday, crop conditions in Texas declined.

"I think the declining crop conditions in Texas got some attention," said Ron Kucha, floor spokesman for O'Connor and Co. As of Sunday, the Texas hard red winter wheat crop was rated none excellent, 9 percent good, 27 percent fair, 32 percent poor and 32 percent very poor.

The previous week's ratings were none in the excellent category, 9 percent good, 29 percent fair, 35 percent poor and 27 percent very poor.

The agency reported a slight improvement in Kansas, with 8 percent rated excellent, up from 5 percent, and 3 percent rated very poor, down from 4 percent.

Recent rainfall in the US Plains helped boost crop prospects but more rain was needed, crop experts have said.

Scattered and light rainfall was expected off and on into the weekend in the US Great Plains hard red winter wheat region, a Weather Services Corp. meteorologist said. Some support was also seen from talk Tuesday that Egypt was in the market for 80,000 to 85,000 tonnes of US wheat plus China resurfaced Tuesday in the export playing field.

China could import 3 million to 4 million tonnes of wheat in 2000/01, up from about 700,000 tonnes this year, because of reduced production and grain stocks, a US wheat industry aide said on Tuesday.

"There's no reason in my mind why we should not have a 30-40 percent share of the market," Paul Dickerson, vice president of overseas operations for the US Wheat Associates, said at the group's annual board of directors meeting.

Dickerson also said that easing US sanctions against Iran by dropping restrictions on some imports would greatly increase the chance of US wheat sales to that country.

In active export workings this week, the Taiwan Flour Mills Association bought 106,900 tonnes of US wheat at a tender on Tuesday, traders in Taipei said.

The association had tendered for 242,500 tonnes of US wheat in seven shipments for delivery between April and July, but bought only 106,900 tonnes at the tender on Tuesday.

The Philippine Association of Feedmillers Inc. will tender on Wednesday for 34,100 tonnes of US wheat, corn, soyabeans and soyabean meal, officials said.

Funds bought 600 lots. Cargill Inc. bought 1,000 May, FIMAT Futures sold 1,000 May, E.D. & F. Man International sold 400 May, Refco Inc. bought 400 May and sold 200 May and Tenco Inc. sold 400 July.

CBOT wheat futures volume was estimated by the CBOT at 30,000 lots, above the 10,960 lots traded Monday.

Wheat options volume was estimated at 5,000 lots. -Reuters