Wheat futures at the Chicago Board of Trade closed higher on Tuesday on a technical bounce from oversold levels and on weather woes, traders said.
Pakistan said Tuesday it would import 1 million tonnes of wheat to build reserve stocks.
"I think most of today's gains were technical. The Pakistan story might be supportive, but I think they will wait until new-crop becomes available and it's doubtful they'll buy all of the wheat from the US," said Shawn McCambridge, analyst for Prudential Securities.
CBOT wheat closed 1 to 6 cents per bushel higher, with July up 2-3/4 at $3.70-1/2.
Traders said the wheat market was undergoing a recovery after the market fell sharply late last week, leaving it vulnerable to a technical bounce.
The nine-day relative strength index for July had fallen to 12 last Friday and stood at 34 prior to the open on Tuesday. Chartists consider an RSI of 30 or less as an oversold market and 70 or more as an overbought market.
Renewed concerns about weather and the fate of parts of the 2004 US winter wheat crop also helped buoy prices, pit sources said.
The wheat crop in the US western Plains will not get much, if any, relief from the current stress from drought, a private forecaster said on Tuesday.
"The wheat belt is still too dry in the west and it will dry out even more with the heat coming in," said Meteorlogix forecaster Joel Burgio.
USDA late Monday said 45 percent of the crop was in good-to-excellent condition, unchanged from the prior week. USDA said 69 percent of the crop was headed, up from 55 percent the previous week.
Export activity was routine and failed to generate any bullish momentum. South Korea bought a total of 20,000 tonnes of US wheat and tendered for another 22,500 tonnes. There was a lack of confirmation that China bought any more US wheat. Wheat climbed on Monday on a technical bounce, and the gains led to talk that China might be buying US wheat.
Cash SRW wheat basis values were steady and farmer selling was quiet. Technical support in the July contract was at $3.56 and resistance at $3.73-1/2 was broken, driving the contract to a session high of $3.74. Key support is at the 200-day moving average of $3.67-1/4.
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