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CBOT wheat closes higher on hopes for big food aid

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed strongly higher Wednesday on hopes for a big food aid package including U.S. wheat, traders said.

CBOT wheat closed 3 to 6-1/2 cents per bushel higher, with March up 6-1/4 at $2.65-1/2.

"Glickman said there would be a food aid package in the next few days that would help wheat farmers and there are still weather worries. All that helped wheat," said Vic Lespinasse, floor spokesman for A.G. Edwards.

U.S. Department of Agriculture Secretary Dan Glickman said on Wednesday that U.S. wheat producers would be happy with the amount of wheat included in a new food assistance programme to be announced within the next few days. But Glickman, in remarks to a U.S. wheat industry conference in Las Vegas, would not disclose the actual volume of the food aid.

Wheat surged to a two-week high in late dealings, inspired by fund buy-stops when March moved above its 100 day moving average of $2.63-1/2. "The buy stops went into high gear there," a wheat trader said.

Support also came from news Egypt bought 105,000 tonnes of U.S. wheat, and from concerns about drier-than-desired weather in the U.S. Great Plains despite forecasts for precipitation soon in several of the key hard red winter wheat producing states.

Dry weather has been underpinning wheat futures, but some precipitation was forecast for the key Plains hard red winter states. Weather Services Corp. projected up to 1/4 inch of precipitation for much of Kansas and northern Oklahoma on Thursday and Friday.

The moisture should provide some relief for dry winter wheat ground, which has suffered from below-normal precipitation since the crop was seeded last fall. But much more was needed to boost soil moisture as the end of the winter dormancy period neared, meteorologists said.

In other export news, the U.S. Commodity Credit Corp. said Tuesday it bought 115,000 tonnes of U.S. hard red winter wheat for donation overseas. South Korean milling interests bought 20,800 tonnes of U.S. wheat from Japanese trading house Marubeni Corp via tenders on Wednesday, traders said.

RJ O'Brien & Associates bought 700 March contracts. Prudential Securities bought 400 March contracts and 200 each in May and July, O'Connor & Co. bought 600 March, Term Commodities bought 500 March and 200 May, FIMAT Futures Inc. sold 600 March and Cargill Inc. sold 400 March, floor sources said.

Also in late dealings, Prudential Securities sold 1,100 March, traders said.

CBOT wheat futures volume was estimated by the CBOT at 28,000 lots, above the 21,348 lots traded Tuesday.

Wheat options volume was estimated at 5,300 lots.-Reuters