US WHEAT REVIEW: Higher As Market Follows Corn Rally

CHICAGO (Dow Jones)--U.S. wheat futures ended higher Thursday, rebounding from early losses as the market followed corn higher.

Soft red winter wheat for March delivery at the Chicago Board of Trade ended up 6 1/4 cents, or 0.8%, to $8.03 1/2 per bushel. Hard red winter wheat at the Kansas City Board of Trade ended up 8 3/4 cents, or 1%, to $8.86 1/4 and Minneapolis Grain Exchange wheat settled up 8 3/4 cents to $9.20.

End-user buying and a cut to projected Argentina supplies pushed corn higher, which in turn supported wheat, traders said. The two markets are tied together because both are used as animal feed.

The market had been lower early in the session amid broad-based commodity weakness, thanks to a stronger dollar, which makes dollar-denominated commodities less attractive to foreign buyers.

Longer-term, traders are worried about global grain supplies thanks to crop disruptions and surging demand, although some analysts say wheat is less likely than corn or soybeans to face a severe shortage.

But surging corn and soybean prices can also influence wheat, as buyers are compelled to purchase feed-quality wheat for livestock instead of corn.

Chinese buyers have agreed to buy four cargoes of Australian feed wheat, likely totaling around 200,000 metric tons, according to a person familiar with the matter.

Analysts said the deals were supportive to corn futures over the longer term because they confirm China needs to import grain.

"It's extra grain demand," said Jim Gerlach, president of A/C Trading, an Indiana-based brokerage firm.

Rice Futures

U.S. rice futures ended higher Thursday amid support from other grains. The market is up 7.8% since Jan. 7.

Rice for March delivery at the Chicago Board of Trade closed up 4 cents, or 0.3%, to $14.70 1/2 per hundredweight.

"Funds appear to be driving the market higher based on reports that 2011 plantings in the southern production area will be sharply lower as producers opt to plant corn, soybeans or cotton," the Arkansas Farm Bureau said in a commentary.

But it warned the rally has kept U.S. prices expensive relative to Asia prices, which could cost the U.S. potential export business.

-By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com

--Tom Polansek contributed to this report.

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