Wheat futures at the Chicago Board of Trade closed lower on Monday but gained back some ground against both Kansas City and Minneapolis wheat in inter-market trade, traders said.
Traders bought Chicago wheat while selling Kansas City contracts, liquidating spreads after Kansas City December wheat gained more than 18 cents last week against Chicago December.
"That's a lot in a month. In a week, it's extraordinary. They needed to correct," one Chicago trader said of the spread.
CBOT December wheat closed down 3/4 cent at $3.17 per bushel after dipping to $3.16, staying above the contract low of $3.15. Deferred months closed flat to down 1 cent.
Funds sold around 1,000 contracts, traders said.
Volume was heavy, estimated by the exchange at 59,444 futures and 5,522 options.
CBOT wheat had underlying support from short covering after Friday's Commitments of Traders report showed funds expanded their net short position in Chicago wheat in the week ended October 25. Funds were net short 29,215 lots in combined futures and options, up from 11,439 the previous week.
The report also showed funds remained heavily net long in Kansas City and Minneapolis wheat, a factor that may have contributed to the spread trade as brokers liquidated positions at the end of the month.
There was not much export interest to support futures, and traders were disappointed by the size of Egypt's weekend purchase of US and Australian wheat.
Egypt on Saturday bought 120,000 tonnes of wheat for shipment in early December, including 60,000 tonnes of US soft white wheat and 60,000 tonnes of Australian hard wheat.
The US Department of Agriculture reported weekly export inspections of US wheat at 21.4 million bushels.
Traders continued to await USDA confirmation of last week's sale of 1 million tonnes of US wheat to Iraq.
After the close, USDA said in its weekly crop updates that 61 percent of the US winter wheat crop was rated in good to excellent condition, up from 57 percent a week ago but down from 78 percent a year ago.
USDA said the crop was 92 percent planted and 76 percent emerged, ahead of the respective five-year averages of 88 percent and 73 percent.
The Meteorlogix weather service said rainfall over the weekend in the southern part of the US Plains hard red winter wheat belt should boost emergence of the newly seeded crop.
Cash basis bids for soft red winter wheat in the Midwest were mostly steady and farmer selling was slow.