Wheat futures on the Chicago Board of Trade retreated from early strength and closed lower on profit taking on Wednesday after Iraq confirmed a purchase of US wheat, traders said.
Traders said the wheat market was setting back in a typical "buy the rumour, sell the fact" move amid the Iraq news.
A senior Iraqi trade official on Wednesday said Iraq bought a total of 1 million tonnes of US wheat from Columbia Grain and Louis Dreyfus at $190 per tonne. Anticipation of the business boosted CBOT wheat futures on Tuesday and early Wednesday.
CBOT December wheat closed down 2 cents at $3.23-1/2 per bushel, again finding support below $3.23. Deferred months were down 2-1/2 to up 3 cents.
Volume was estimated by the exchange at 27,094 futures and 7,135 options.
Funds sold 1,000 lots while commercials were light buyers.
Because Iraq typically buys hard red winter wheat, the type traded in Kansas City, the news lifted nearby KCBT wheat futures, widening the KCBT/CBOT wheat spread. KCBT December wheat settled up 2-1/2 cents at $3.72-3/4.
CBOT wheat had some underlying support from USDA's crop progress reports on Monday, which showed the US winter wheat conditions well below the ratings of a year ago. Traders were monitoring dry conditions in Texas, Arkansas and the Pacific Northwest.
However, the Meteorlogix weather service said current soil moisture and temperatures mostly favoured the developing hard red winter wheat crop in the US Plains.
There was bearish news from Australia, where monopoly exporter AWB Ltd raised its forecast of Australia's 2005-06 wheat crop by nearly 10 percent to a near-record level of 23 million to 25 million tonnes. The crop was boosted by good spring weather, AWB said.