CBOT wheat futures down on rains, Egyptian snub

Wheat futures at the Chicago Board of Trade closed lower on Tuesday on rains in the Plains hard red winter wheat region and an Egyptian snub of US wheat, traders said.
CBOT wheat closed 2 to 8-1/2 cents per bushel lower, with May down 8-1/2 at $3.70. July was down 6-1/4 at $3.79.
Technical support in the July contract at $3.82-1/2 was broken, driving the contract to a session low of $3.78-1/4.
Rains over the weekend should slow the decline in hard red winter wheat conditions, and additional rainfall is expected to move through the US Great Plains hard red winter wheat region this week, a private forecaster said on Tuesday.
"There will be scattered showers Wednesday and Thursday in the east and south," said Meteorlogix forecaster Joel Burgio.
Burgio said from 0.25 inch to 1.00 inch of rain is expected to cover the eastern and southern portion of the Plains, with the western Plains likely to receive only 0.25 inch or less.
The market also was hit by news that Egypt's GASC cancelled its overnight snap tender, complaining about prices.
Some underpinning was coming from the fact that the market has now fallen into oversold technical territory, leaving it set up for a technical rebound. The nine-day relative strength index for July closed Monday at 30. Chartists view an RSI of 30 or less as an oversold market.
A decline in condition ratings for the US winter wheat crop failed to give the market a lift. USDA late Monday said 45 percent of the crop was good to excellent, down from 48 percent a week ago.
And the resurgent dollar on the outlook for higher US interest rates was seen limiting attempts to rally grain futures, since the dollar's strength dampens importer demand.
Position-squaring was noted ahead of Wednesday's USDA May supply/demand reports. The USDA Wednesday will give its first estimate for this year's US winter wheat production. An average of analysts' estimates pegged this year's winter crop at 910 million bushels, below last year's production of 1.063 billion. The analysts pegged old-crop (2003/04) US wheat carryout at 528 million bushels and forecast new-crop (2004/05) carryout at 519 million.
Deliveries on the May contract remained light at only 15 lots on Tuesday, and a Tenco customer stopped all of the wheat.
Futures volume was on the larger side estimated at 34,136 lots. Option trade was seen at 3,464 options.