Soft red winter wheat futures at the Chicago Board of Trade closed mostly higher on Tuesday on a technical recovery after dropping yesterday to new contract and fresh 18-month lows, traders said. Lighter-than-expected deliveries on the December contract also buoyed prices, they said. CBOT wheat closed 2-3/4 cents higher to 1 cent lower, with December up 2-3/4 at $2.89-3/4 per bushel and March was up 3/4 at $3.01-1/4.
The slide of wheat futures on Monday drove the market into oversold technical areas, making it susceptible to a bounceback. The nine-day relative strength index for December closed on Monday at 26.
Technical traders view an RSI of 30 or less as an indication the market is oversold. Traders said deliveries on the December contract were on the light side, which boosted the December contract compared to other months.
On Tuesday was first notice day for deliveries and the tally at 612 lots was in the low end of estimates that had ranged from 500 to 1,500 lots. A commercial delivered the wheat and there was scattered stopping.
Registrations with the CBOT were unchanged at 1,268 lots. The December/March spread narrowed 2 cents with December gaining on the March and closed at 11-1/2 cents, premium March.
Some support also was coming from news that Australia's forecaster ABARE cut its outlook for Australia's 2004/05-wheat crop to 20.2 million tonnes from its September forecast for 22.3 million.
Harsh weather has been cutting into Australia's crop. Exports were routine overnight with South Korea tendering for 21,500 tonnes of US wheat. However, the traders said gains were capped by a decline in soya and by persistent pressure over the market stemming from the big global wheat crop this year.
Likewise, good crop weather in the US winter wheat growing region limited the gains. USDA late on Monday pegged the US winter wheat crop condition at 76 percent good to excellent, unchanged from last week.
Cash basis bids in the Midwest were steady and farmer selling was slow. Technical support in the December contract was at $2.86 with resistance at $2.92.