Soft red winter wheat futures at the Chicago Board of Trade closed firm on Monday on a bout of late short-covering amid signals the market was oversold and due for a bounce, traders said.
The market in early dealings fell to a six-week low and the nine-day relative strength index for May had fallen close to 20, well below the benchmark 30 level that chartists view as an oversold mark.
CBOT wheat closed 1/4 to 2 cents per bushel higher, with May up 1 at $3.74.
FIMAT Futures and Refco Inc turned to the buy side of the market near the close and that brought in a late wave of local short-covering, pit sources said.
A strong number for wheat in USDA's weekly export inspections report released early Monday also may have been encouraging to some wheat bulls.
USDA said 29.572 million bushels of wheat were inspected for export during the week ended last Thursday, well above estimates ranging from 12.0 million to 17.0 million bushels. The report included wheat that was earmarked for shipment to China.
However, the market was hit in early trading by news on Saturday that Egypt's GASC bought 120,000 tonnes of wheat from Australia and none from the United States. Traders had been hoping for a sale of US wheat to Egypt, China or Iraq after the slide of prices late last week.
Fund long liquidation and profit-taking also hit the market amid diminished concerns about the fate of the US hard red winter wheat crop as rains moved through the dry areas of the Plains belt late last week.
Substantial rainfall over the weekend in the western portion of the US Plains hard red winter (HRW) wheat region brought welcome moisture to the drought-stressed crop, a private forecaster said on Monday.
Late Monday, the government reported the US winter wheat crop was 48 percent in good to excellent condition, up from 46 percent a week ago, but down from 54 percent a year ago.
CFTC commitment of traders data showed funds sharply downsized their long stance in CBOT wheat in the week ended on April 20. Funds were long 47,261 lots in wheat futures, down 10,344 from the prior week, and short 16,400 lots, up 370 on the week.
Technical support in the May contract at $3.70 was broken, driving the contract to a session low of $3.66. Resistance was at $3.77. The nine-day relative strength index for May stood at 23 prior to the open on Monday. Chartists view an RSI of 30 or less as an oversold market and 70 or more as an overbought market.
CBOT wheat volume on Monday was estimated at 27,252 lots, compared with Friday's trade of 41,545 contracts. Options trade was seen at 5,070 lots.