CBOT wheat futures down

Fund selling and a downward correction from Tuesday's gains drove Chicago Board of Trade wheat futures to a lower close on Wednesday, traders said. CBOT wheat closed 3-1/2 to 8 cents per bushel lower, with September down 5 at $3.99 per bushel. December was down 5 at $4.17.
"Wheat is already priced pretty high and I just think we're going to bounce around here for awhile," a trader said. Traders and analysts said the wheat market would remain volatile, with dwindling global stocks of wheat and active exports underpinning prices. Weather problems in parts of Europe have boosted European values sharply, a scenario that is expected to generate increased exports into European countries.
Analysts in Paris said on Wednesday that European wheat prices would remain at 2-1/2-year highs as the world's major buyers scramble for cover amid tight supplies, but increasing imports are likely to cap the rally.
Export activity overnight included news that Japan this week would buy 111,000 tonnes of wheat, South Korea was seeking 22,600 tonnes and Taiwan sealed a deal to buy 49,510 tonnes of US wheat on Wednesday.
The export market also remained alive with talk of Indian imports of wheat and Iraq continues to be mentioned as another buyer. India is eliminating its import duty on wheat to stimulate imports.
Weather concerns also remain an important factor in the wheat market. Meteorlogix weather service said on Wednesday recent rains helped replenish soil moisture in the US Plains hard red winter wheat region, but more rain was needed.
A drought this summer has drawn down the soil moisture levels in parts of the Plains, leading to concerns about the fate of the soon-to-be seeded 2007 US winter wheat crop. Meteorlogix also said light rain has improved wheat prospects in west and south-east Australia, but the rest of the wheat region remained stressed by dryness.
Parts of Argentina have received beneficial rain, but more rain was needed, Meteorlogix said. Deliveries on the September contract on Wednesday were light at 284 lots and a Banc of America customer was the key stopper of 252 lots.
Technical traders were watching the December contract trade above all key moving averages and there was key support at the 50-day moving average of $4.10-1/4 per bushel. The nine-day relative strength index for December closed Tuesday at 68. Technical traders view a reading of 70 or above as indicating an overbought market.
Technical support was at $4.20-3/4 per bushel and resistance was at $4.29.