December 18, 2007

CBOT March wheat rallies above US$10 per bushel for first time

Chicago Board of Trade March soft red winter wheat futures pushed above the US$10 per bushel level in open-auction trading to post an all-time high.

At 11:23 a.m. EST, CBOT March soft red winter wheat is 8 1/2 cents higher at US$9.88 per bushel after trading as high as US$10.09 1/2. Wheat futures have rallied over the past week at all three US wheat futures markets as continued tight world wheat supplies have helped lift to all-time highs at the CBOT, Kansas City Board of Trade and Minneapolis Grain Exchange.

The rally has also been boosted by active fund and technical buying with speculative interests providing fuel for the rally, said a CBOT floor analyst.

"There has been little fresh news out to support the recent rally, it has been all speculative based," the analyst said. "We're not trading wheat, we're trading money."

Speculators have not been able to make any money recently in crude oil so they have entered the agricultural commodities with wheat benefiting as a result, the analyst said.

Also driving the rally are recent tenders from key importing countries such as India and Egypt.

Additionally, Argentina has extended the closure of the wheat export registry through the end of the month. The government said it closed the registry for what it said would be five days in order to study the damage to the new crop from recent frosts.

Concerns about the potential for spring wheat acres to be lower this spring due to strong soy prices helped lift MGE spring wheat futures near the US$11.00 per bushel level Monday.

At 11:23 a.m. EST, KCBT March hard red winter wheat is 1 1/4 cents lower at US$9.98 after rallying to US$10.19 per bushel. MGE March spring wheat futures are 7 1/4 cents higher at US$10.83 per bushel.