Wheat futures at the Chicago Board of Trade closed mostly lower on Thursday on profit taking after the recent climb to 10-year highs, traders said. CBOT December wheat settled down 9-1/4 cents, or 1.8 percent, at $5.07-1/2 per bushel. Back months ended down 8-1/2 to up 4-1/2 cents.
Carry-over momentum from a technical breakdown in prices on late Wednesday got the wheat market off to a lower start, and December hit its session low at $5.05 in the opening minutes on Thursday. Funds were net sellers of 2,000 contracts on the day, traders said. Bearish moves in wheat options also weighed on futures, with Fimat USA buying 1,000 December $4.50 puts.
November options expire on Friday, and traders were eyeing the $5.00 strike price as an area of potential volatility. Volume in December $5.00 calls stood at more than 5,700 contracts ahead of Thursday's open.
Concerns about tightening world wheat supplies helped underpin the market. The London-based International Grains Council on Thursday cut its forecast for 2006-07 world wheat production to 585.2 million tonnes, down 2.4 million from a previous estimate of 587.6 million. The IGC pegged Australia's wheat crop at 10.0 million tonnes, down from last month's estimate of 16.0 million. However, the IGC also said world wheat area was forecast to rise by 4 percent in 2007 to total about 215 million hectares.
On the export front, wheat futures were pressured by news that India has no plans to issue fresh wheat tenders. A top food ministry official said India is confident it can build stocks of at least 4 million tonnes by April 1, 2007. Earlier this year India was forced to import wheat for the first time in six years after a crop shortfall.
The US Department of Agriculture's weekly export sales figure for wheat was market-neutral at 460,800 tonnes, within the range of estimates for 300,000 to 500,000 tonnes. But sales of soft red winter wheat, the type traded in Chicago, totalled only 13,900 tonnes. "There is concern on our lack of soft wheat exports. They are still pretty poor," Prudential Financial analyst Shawn McCambridge said.
After the market closed, Egypt's main government wheat buyer said he was seeking 55,000-60,000 tonnes of US, French, Australian, Canadian or German wheat for December shipment.
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