Wheat futures on the Chicago Board of Trade closed mostly lower on Wednesday, retreating from early advances as investors took profits toward the close, traders said.
Concerns about frost in the US Plains underpinned values, along with expectations that the US Department of Agriculture will project a cut in US wheat production in its May reports on Friday.
CBOT July wheat settled 1/4 cent lower at $3.84-1/2 per bushel, with deferred months unchanged to 1 cent lower.
The spot May contract, which expires this week, settled 2 cents higher at $3.77-1/2.
An estimated 59,168 futures and 13,903 options traded. That was down from the 84,999 futures that traded on Tuesday.
Funds were net buyers of 3,000 lots, traders said. Funds were thought to have shifted to a net long position in CBOT wheat futures this week, buying 8,000 contracts in Tuesday's busy session.
In Kansas City, July hard red winter wheat closed down 2-3/4 cents at $4.65-1/4.
Concerns about the state of the US HRW crop remained the key fundamental factor, with the US Department of Agriculture set to issue its first 2006/07 production forecasts on Friday.
Traders expected the USDA to show a drop in US and world wheat production from 2005/06. The average estimate for the US all-wheat crop among analysts surveyed by Reuters was 1.949 billion bushels, down from 2.105 billion in 2005/06.
The average estimate for the drought-hit HRW crop was 757 million bushels, down from 930 million in 2005/06.
Forecasts for frost in the Plains were bullish. A cold spell expected in the northern HRW belt early Thursday and Friday may harm winter wheat plants that are still in the flowering phase of growth, a private forecaster said.
"It could damage the heading wheat crop in north-west Kansas, north-east Colorado and south-west Nebraska," Meteorlogix forecaster Mike Palmerino said.
The market was awaiting news of wheat tenders from India and Iraq. India tendered for 3 million tonnes of wheat this week, and the United States could get a share of the business, although Australia is seen as the likely main supplier.
Iraq is seeking 100,000 tonnes of wheat.
Overnight business was quiet. Japan is seeking just over 100,000 tonnes of wheat in its regular Thursday tender.
On a bearish note, Statistics Canada pegged Canadian all-wheat stocks as of March 31 at 18.8 million tonnes, up 22 percent from the previous year. Canadian durum stocks were at a record-high 5.2 million tonnes.
Deliveries on the CBOT May contract were light at eight lots and there was scattered stopping of the wheat. Registrations with the CBOT were at 1,675 lots, up from the previous 1,672.
The nine-day relative strength index for CBOT July stood at 73 ahead of the open and closed at 72, above the benchmark of 70 that technical traders see as one sign of an overbought market. An RSI of 30 or lower signals oversold conditions.
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