20000302CBOT wheat closes higher on export hopes

CHICAGO: Chicago Board of Trade soft red winter wheat futures closed higher Tuesday, shrugging off heavy delivery notices posted against the March contract in favour of hopes for increased exports of US wheat, especially to China.

CBOT wheat closed 3 cents higher to 1/2 lower, with March up 2-1/2 at $2.47. May closed 2-1/4 higher at $2.59.

"The climax of the bearish news may have been the heavy deliveries and I think the prices may have gotten down to fair market value," said Don Roose, analyst for US Commodities, Des Moines, Iowa.

The delivery total at 4,797 lots was above expectations for 2,000 to 3,000 lots. Tuesday was first notice day for deliveries on the March contract. "The deliveries were expected to be big but not this big," a trader said.

Some traders had called the market to be lower Tuesday amid the larger-than-expected delivery notices, while others had pinned their hopes on China's buying US wheat to lift the market.

China bought 50,000 tonnes of US wheat from the US Pacific Northwest. China had blocked wheat imports from the region since 1972 because of the sour-smelling TCK fungus, which scientists say is harmless.

US Agriculture Secretary Dan Glickman on Monday said the purchase was "encouraging" and hoped there would be "many more such purchases to come." The purchase is considered a "trial shipment" under a Sino-US wheat pact signed last year.

Industry sources in China said the purchase was not expected to affect its imports from other countries.

"The significance is that wheat from the northwestern United States is now accepted in China," said a state grain firm analyst. Given the small amount of the purchase, the US wheat was unlikely to edge out other foreign wheat exporters in China, he said.

Crop weather in the US Great Plains recently improved with rainfall received in several key hard red winter states. But additional moisture is needed to help boost crop prospects. Dryness has affected the crop in western Kansas with spotty stands, Weather Services Corp. said. But eastern Kansas crops are in better shape.

The Kansas Agriculture Statistics Service Monday reported the Kansas wheat crop at 5 percent excellent, 35 percent good, 33 percent fair, 20 percent poor and 7 percent very poor.

Crops are in poor to very poor condition across Texas where germination was poor and seedling death was on the high side. Oklahoma crops are poor in the west and fair to good in the east.

Very dry conditions have also affected crops over Nebraska. Rain has been occurring mostly in the eastern areas, skipping the western areas that are in most need of moisture. Some beneficial precipitation may occur at midweek in some of the drier central and south central areas, depending on the track of a storm forecast to move through the region, WSC said.

Key areas of the US Great Plains hard red winter wheat (HRW) region should receive moisture this week in the form of rain and possibly rain mixed with wet snow, a WSC meteorologist said.

There are signs of another major system next Tuesday leaving from 0.30 inch to 1.00 inch over a broad area of the wheat belt, he said.

Funds sold 1,300 lots. Cargill Investor Services and Goldenberg Hehmeyer each bought 400 May, FIMAT Futures bought 700 May, E.D. and F. Man International bought 1,200 May and sold 400 May, Rand Financial sold 500 May and Carr Futures sold 300 May.

CBOT wheat futures volume was estimated by the CBOT at 38,000 lots, below the 62,670 lots traded Monday.

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