Wheat futures at the Chicago Board of Trade closed sharply lower on Friday as weak technical signals triggered fund selling, traders said. Bearish fundamentals played a role, including favourable weather in the US winter wheat belt and plentiful global wheat supplies, traders said. May wheat closed down 8-1/2 cents at $3.22-1/2 per bushel, after slipping to a five-week low at $3.19-1/2. Deferred months were down 5-1/2 to 9-1/2 cents. Funds sold between 5,000 and 6,000 lots.
Volume was heavy, estimated by the exchange at 63,232 futures and 11,642 options.
A sharp drop in CBOT soyabeans weighed on values, but analysts said the wheat market was also reacting to Thursday's weaker close. CBOT wheat tumbled late Thursday, retreating from early strength as soyabean futures collapsed. "It's the negative reaction to yesterday's reversals. You've confirmed it today," said Roy Huckabay, an analyst with the Linn Group.
Technical traders noted the May contract late on Thursday dipped to $3.30, a key level in a "head and shoulders" chart formation that often signals a reversal in market direction. The May contract peaked at $3.30 on Friday and traded lower for most of the day.
Good weather for the US winter wheat crop was also seen as bearish. Traders said the wheat crop had broken dormancy and there were expectations for crop conditions to stay strong amid overall plentiful soil moisture reserves.
The Illinois Agricultural Statistics Service said in a statement on Thursday that 68 percent of the state's soft red winter wheat crop was rated good to excellent.
Crop reports from Kansas and other Plains states released earlier this week reported similarly strong ratings for the hard red winter wheat crop.
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