Chicago Board of Trade wheat futures closed weak on Monday, backing off early gains after follow-through buying failed to materialise and Kansas City Board of Trade wheat declined, traders said. "There is just nothing to hold this market together. Kansas City fell apart. Last week it was one of our good supporters," one CBOT trader said.
CBOT March wheat closed 1/2 cent per bushel lower at $2.95-1/4. May ended unchanged at $3.02-3/4.
Volume in Chicago was light estimated at 19,719 futures and 4,739 options.
Funds bought about 2,000 contracts. Calyon Financial bought 1,000 March while Prudential Securities sold 900 March, traders said.
The market opened higher on short covering after the CFTC's Commitments of Traders report on Friday showed large speculators expanded their net short position in CBOT wheat to a record level, traders said.
For futures, funds were short 77,173 contracts, up 10,747 from the prior week, and long 36,768 contracts, down 245.
Fresh export data was supportive as well. The US Department of Agriculture reported US export sales of wheat for the week ended January 13 at 476,700 tonnes (current market year 451,700 tonnes), above trade expectations for 250,000 to 400,000 tonnes.
USDA also reported weekly export inspections of wheat at 17.4 million bushels, above trade expectations for 12 million to 17 million.
Bullish technical signs indicated wheat futures might be due for a bounce. Monday marked the sixth consecutive day that CBOT March closed below its 14-, 20- and 50-day moving averages, and the nine-day relative strength index for the contract closed at 38, near the benchmark level of 30 that chartists view as oversold.
Overnight export business was slow. Algeria tendered to buy 50,000 tonnes of milling wheat. The market continued to await confirmation of US wheat sales to Iraq.
Traders were keeping an eye on weather in the soft red winter wheat region of the US Midwest.
Weekend storms blanketed the region with a snow layer that should protect the dormant crop from frigid temperatures. But rising temperatures expected by midweek could launch another round of freeze-thaw conditions, potentially damaging the crop.