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CBOT wheat closes lower on improved crop weather

CHICAGO: Chicago Board of Trade soft red winter wheat futures closed sharply lower on Friday on improved crop weather in the US and forecasts for better weather over the next week or so, traders said.

CBOT wheat closed 3 to 9 cents lower, with on March down 6-3/4 at $2.48. May was down 8 at $2.59-1/4.

March fell to a session low of $2.47-1/2, a 7 week low and the lowest level for that month since $2.46 was notched on Jan. 7.

"All the talk about China buying didn't help a bit. The weather hit the wheat pit along with everything else," said Ron Kucha, a floor spokesman for O'Connor and Co.

There were some ideas early on Friday that wheat may trade firm on Friday on talk China may be set to buy some US wheat.

But rainfall this week in the US winter wheat growing region, especially in the key US Plains hard red winter wheat area, led the way down, traders said. Also there were forecasts for additional rainfall next week in the Plains states and the market was technically weak after the fundamental break in prices this week.

Some underpinning may have come from the US Department of Agriculture's weekly export sales report listed net US wheat sales for the week ended on Feb. 17 at 607,800 tonnes, 35 percent above the previous week and 22 percent over the four-week average. Trade expectations were for 300,000 to 600,000 tonnes. In China-related news, the US ambassador to China said late on Thursday that a Chinese grain team visiting the US was expected to buy US wheat.

"Our expectation is they're here to buy wheat and we're watching it very carefully," Ambassador Joseph Prueher told reporters after a speech at the Agriculture Department's annual Agricultural Outlook Forum.

The US Commodity Credit Corp. said Thursday it bought 380,000 tonnes of US wheat for export donations from March 15 to May 31.

Some early support for wheat arose from USDA crop projections released on Friday. USDA analysts, speaking at the outlook forum, said dry weather in the southern and central Plains may cut US wheat yields and hold this year's wheat crop to 2.12 billion bushels, compared to 2.302 billion in 1999/2000.

But the recent moisture received in the Plains overrode the dated USDA analyst's remarks.

Funds sold at least 5,500 contracts on the day, traders said. E.D. & F. Man International sold 2,000 on July, Refco Inc. sold 500 on May and 400 July and FIMAT Futures Inc. bought 1,300 on May. E.D. & F. Man also sold 500 on May near the close, traders said.

Wheat futures volume was estimated by the CBOT at 40,000 lots, above the 36,115 lots traded on Thursday.

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