CBOT wheat down to six-week low

Wheat futures on the Chicago Board of Trade closed lower, falling to a six-week low on Tuesday on long-liquidation and profit-taking, traders said. "It's further long-liquidation and how much longer it can go remains a big question," said Terry Reilly, analyst for Citigroup.
CBOT wheat closed 1 to 5 cents per bushel lower, with December down 5 at $8.28-1/2 per bushel. The December contract fell into a chart gap that was left on September 5 and selling waned in that area, a potential supportive signal for the wheat market.
The 10-cent gap from $8.05-1/4 to $8.15-1/4 also drew attention to key support at the contract's 50-day moving average of $8.13. Although the contract dropped to a session low of $8.10, selling slowed around that level. "I only see more downside risk to around $8.00, there's nothing really new that's fundamentally bullish so there may be a little more downside to go," Reilly said.
Bear-spreading buoyed new-crop months at the expense of nearby, or old-crop, contracts as tired longs continue to exit their holdings of old-crop wheat futures. Traders said the wheat market was undergoing a liquidation phase after the rally late this summer to record-high prices.
They said there was nothing in the export arena to give wheat futures a lift, with Japan seeking 85,000 tonnes at its regular weekly tender. Taiwan on Thursday is expected to tender for 42,350 tonnes of US wheat.
Wheat analysts and traders said bullish fundamental news, such as tight global stocks and a drought in Australia's wheat region, had already been factored into the market, leaving it vulnerable to a profit-taking setback.
DTN Meteorlogix weather service on Tuesday said Australia's wheat belt needs more rain to prevent further yield losses on that portion of the crop that is in its filling stage of development.
Rainfall over the next week will aid fall seeding and winter wheat prospects in the US Plains hard red winter wheat region, but more rain is needed in the far Southwest, Meteorlogix said. USDA late on Monday said 73 percent of the US winter wheat crop had been planted, behind the 76 percent five-year average. Forty-three percent of the crop had emerged, USDA said.