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CBOT wheat closes mostly lower on slight setback

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed mostly lower Monday on a setback after last week's rally to near three-month highs, traders said.

CBOT wheat closed 1-1/4 cents lower to 1/4 higher, with March down 3/4 at $2.68-3/4.

"It was quiet and it just set back a little, but it held impressively well after last week," a trader said.

Wheat rallied last week on hopes for a US food aid package soon that would include a large amount of US wheat. US Agriculture Secretary Dan Glickman Monday said the United States would have to buy many of the commodities necessary for its planned 3 million tonnes of food aid to needy countries.

Wheat again found strong underpinning on persistent concerns about dry weather in the US Great Plains hard red winter wheat region.

Only modest precipitation fell in the Plains over the weekend, and forecasts for this week were mostly dry.

Winter wheat in parts of Kansas and other Plains areas has suffered from below-normal precipitation since the crop was seeded last fall, leading to germination and establishment problems. But meteorologists noted that the Plains typically receives only limited precipitation during February, and that March will be a much more critical time in terms of moisture.

Wheat futures also found support from improved export prospects tied to another US food aid package announced last week. China may also be a factor for US wheat exports, with a wheat team from China's state grain agency expected to visit the United States this month.

Last week, some members of Congress urged China to purchase US wheat, meat and citrus as soon as possible to shore up support for congressional approval of permanent normal trading relations. China, in a pact signed with the United States last year, agreed to remove long-standing barriers to imports of US wheat, meat and citrus.

The latest commitments of traders reports from the Commodity Futures Trading Commission indicated that speculative commodity funds slightly increased a net short position in the wheat futures market over the past two weeks, traders said.

The CFTC said that as of Feb. 8, noncommercial interests, which are primarily funds, held 24,285 short wheat futures contracts and 22,265 longs, for a net short of 2,020 contracts. As of Jan. 25, the net noncommercial short was 1,722.

Prudential Securities sold 400 March contracts. In spreading, Term Commodities bought 1,000 May and sold 1,000 March at a price difference of 11-3/4 cents and Cargill Inc. bought 300 March and sold 300 May, traders said.

CBOT wheat futures volume was estimated by the CBOT at 22,000 lots, below the 59,040 lots traded Friday.

Wheat options volume was estimated at 6,000 lots. -Reuters