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CBOT wheat closes higher as weather eyed

CHICAGO: Chicago Board of Trade soft red winter wheat futures closed higher Monday, lifted by concerns over dry weather in the US Midwest and unsettled weather patterns in the Great Plains.

CBOT wheat closed 2-3/4 to 3-3/4 cents higher with March up 3-3/4 at $2.53-3/4. May closed 3-1/2 higher at $2.63-1/2.

"There could be some problems with the wheat crop because some of it didn't germinate until February or later so it still looks pretty ragged," said Dick Quiter, analyst for LFG.

Recent showers in the US winter wheat growing region helped stem deterioration of key portions of the crop but more rain is needed to ensure a good production year.

During the weekend some light rain and snow was noted across the north and the far eastern part of the US Great Plains, but generally only 0.10 inch (3 mm) or less of precipitation was reported, Weather Services Corp. said.

It was dry in the southwest, WSC said.

There will be a few isolated showers or thunderstorms in the east on Wednesday with scattered showers and storms in the southeast early Thursday, according to WSC. It will be dry Friday, and temperatures will be above normal Wednesday and trending cooler Thursday and Friday, WSC said.

Tuesday's planned tender for 242,500 tonnes of US wheat by the Taiwan Flour Mills Association also supported the market.

The group's secretary-general Ching-Ho Huang said anticipation of higher rates in the dry cargo freight market sparked fears of rising import prices for wheat and caused its members to step up imports.

There also was a report Monday that the United States could donate more wheat to Pakistan in repayment for US fighter jets that were never delivered.

"It's one of the ways we have to make good on the non-delivery of the fighter jets," Richard Fritz, general sales manager in the Foreign Agricultural Service, told Reuters, after a speech to a wheat industry group.

Fritz declined to say how much wheat could be donated. "That's going to be part of the negotiations," he said.

Last year, the United States donated wheat to Pakistan in partial repayment for 28 F-16 jets that Islamabad purchased for $658 million but never received because of US sanctions that were imposed in 1990.

There was news overnight from Asia that Sri Lanka had invited tenders for a total of 100,000 tonnes of hard and soft wheat. The United States was on the list of possible sources that included Canada, Europe and Argentina.

Technical traders cited support in the May contract at $2.58 and resistance at $2.63-1/2.

Funds bought 400 lots. D.T. Trading bought 200 May, Cargill Inc. bought 200 May and sold 100 May, Term Commodities sold 400 May and E.D. & F. Man International sold 300 May.

CBOT wheat futures volume was estimated by the CBOT at 14,000 lots, below the 15,233 lots traded Friday.

Wheat options volume was estimated at 2,500 lots. -Reuters