Wheat futures at the Chicago Board of Trade closed higher on Tuesday in a technical correction from Monday's weather-driven plunge to two-month lows, traders said. "We were oversold and due for a bounce," one trader said.
But continuing pressure from the improved weather in the US winter wheat belt and languishing export sales of US wheat limited the rally. CBOT May wheat settled up 2-1/4 cents at $3.52-1/2 per bushel, with July up 2-1/2 at $3.64-3/4 and deferreds up 3 cents to down 1/2.
Funds were net buyers of 2,000 contracts, traders said. Volume was estimated by the exchange at 36,781 futures and 6,168 options. Strength in the Kansas City wheat market was supportive, with July up 5-1/2 at $4.20-1/4 by the close.
The US Plains and Midwest winter wheat regions received significant moisture over the past couple of days, driving wheat futures lower on Monday. Some additional light snow or rain was forecast for the Plains HRW belt on Wednesday, with accumulations of 0.25 inch or less.
The recent storms arrived too late to have much impact on weekly crop condition ratings in the Plains. USDA state reports issued late Monday showed weekly wheat ratings declined in Kansas, with 24 percent of the HRW crop rated good to excellent, from 29 percent a week earlier. In Oklahoma, 70 percent of the crop was rated poor to very poor, although topsoil moisture improved.
Prospects for a strong soft red winter wheat crop pressured the cash basis in the interior Midwest. But CIF values for SRW wheat at the US Gulf firmed at midday amid fresh inquiries from Caribbean buyers, export traders said.
Export sources also noted talk that Iraq was seeking US hard red winter wheat, although no business was confirmed. Overnight exports were routine, with South Korea tendering to buy 9,200 tonnes of US wheat.
The nine-day relative strength index for CBOT May wheat stood at 30 ahead of the open and closed at 33. Technical traders consider an RSI of 30 or lower as one indication of an oversold market. May had chart support at its 100-day moving average of $3.48-1/4 and broke through resistance at the 200-day MA of $3.52-3/4.