Wheat futures on the Chicago Board of Trade closed mostly flat in a shortened session on Wednesday, retreating from early strength in response to fund selling in the Kansas City market, traders said.
CBOT December wheat settled unchanged at $2.97 per bushel after climbing to $2.99 earlier in the day. Deferred months closed flat to down 1/4 cent, and the September 2006 contract set a contract low.
Funds sold 500 to 1,000 contracts, traders said.
Volume was moderate estimated at 37,403 futures and 2,897 options. That compared to 44,592 futures traded on Tuesday.
US markets will be closed on Thursday for the US Thanksgiving Day holiday. CBOT grain markets will also close at noon CST on Friday.
Prices opened firm on a technical rebound from a series of recent contract lows. Then, in a repeat of Tuesday's market pattern, CBOT wheat turned lower when funds began liquidating long positions at the Kansas City Board of Trade.
KCBT December wheat closed down 4 cents at $3.47-1/2 after falling to $3.45, a two-month low. Funds have been heavily net long in Kansas City and Minneapolis, leaving those markets open to long liquidation.
Light short-covering ahead of the holiday brought CBOT futures back to unchanged levels by the close. Technically oversold signals and a net short position held by funds in Chicago wheat helped underpin prices.
CBOT wheat gained ground against the other two markets in inter-market spreads.
The nine-day relative strength index for the CBOT December contract closed at 18. Chartists view an RSI of 30 or lower as one sign of an oversold market, while an RSI of 70 or higher indicates an overbought market.
Overnight export activity was routine. South Korean flour millers bought 21,500 tonnes of US No 1 wheat from Columbia Grain International Inc, while Korea Flour Mills Co Ltd bought 18,800 tonnes of US No 1 wheat from Toepfer.
Also, Tunisia issued a tender to buy 125,000 tonnes of milling wheat and 100,000 tonnes of feed barley.
Private forecaster Meteorlogix said dry weather would persist in the southern US Plains hard red winter wheat belt through the weekend, but some much-needed rain and snow was expected to move in on Sunday.
Crop conditions remained favourable in the US Midwest soft red winter wheat region.
Midwest cash basis bids for SRW wheat continued to strengthen on Wednesday amid demand from domestic millers.
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