Wheat futures at the Chicago Board of Trade closed weak on Tuesday on a downward correction from the strong rally on Monday, traders said. Pit sources said locals were sellers in a profit-taking bid after Monday's fund short covering boosted the market to a one-month high, traders said. CBOT March wheat closed 2-1/2 cents lower at $2.99-1/4 per bushel. Other months were 2 to 3-1/2 cents per bushel lower.
Firms continued to roll their March positions before first notice day on February 28. That spread trade accounted for a large percentage of the volume on Tuesday, traders said.
Estimated volume was large at 44,141 futures and 5,712 options.
Technical traders noted that March closed technically strong on Monday and above the key 20- and 50-day moving averages. But the market was getting close to overbought technical levels with the nine-day relative strength index for March closing Monday at 64.
Export action included news early Tuesday from USDA that US exporters sold 100,000 tonnes of US hard red winter wheat to Iraq. Traders said there were no signs of pending large-scale export business that would give wheat futures a sustained lift. Abundant stocks of wheat globally continue to act as a fundamental anchor for wheat futures prices.
Australia's government forecaster on Tuesday raised its estimate of the wheat crop for 2004/05 by 1.1 percent, but said the crop would still be 21 percent lower than the 2003/04 harvest.
Cash basis bids for SRW in the Midwest were flat and farmer selling remained slow.
Technical support in the March contract at $2.99-1/2 per bushel was broken, driving the contract to a session low of $2.98. Resistance was at $3.03-1/2.
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