Wheat futures at the Chicago Board of Trade fell more than 4 percent on Wednesday on profit-taking, bearish input from outside markets and concerns over the state of US wheat export sales to Iraq and Egypt, traders said.
CBOT wheat closed unchanged to 23 cents per bushel lower, with December down 23 cents at $4.75 per bushel. March was down 21-3/4 at $4.95-1/2 per bushel. The market also may have been pressured by news Egypt's president said Egypt will import 750,000 tonnes of wheat from Kazakhstan. The United States is traditionally a big seller of wheat to Egypt.
Traders also were eyeing outside markets on Wednesday and got some additional bearish input from a firm dollar and weak gold. "Wheat was technically weak coming into the market. There's really just no talk of strong demand. Also, you had pressure from the other markets being down hard. So it's kind of three strikes and you're out," said Shawn McCambridge, analyst with Prudential Financial.
The market is awaiting results of an Iraqi tender for 100,000 tonnes of optional-origin wheat and the US and Canada are the top contenders to land the Iraqi business on Saturday, US traders said. Meanwhile, Iraq has begun shipping some of the 700,000 tonnes of US wheat purchased earlier this year, they said.
And while there are some problems with the letter of credit Iraq sent to guarantee the payment of the wheat, export sources expect Iraq to eventually take delivery, US wheat traders said.
"Letters of credit are fairly complex and everything needs to be just right or you can't get paid," said a trader who has dealt with Iraq. This was not the first time exporters have encountered problems with the letters of credit that Iraq has provided, they added.
Crop weather in the United States was generally satisfactory for the US winter wheat crop that is entering its winter dormancy period but there are a few pockets of dryness.
Meteorlogix weather on Wednesday cited the potential for beneficial moisture next week in the US Plains wheat region and said soil moisture remains short in northern China. China's wheat output could fall 3.4 percent to 99.5 million tonnes next year because of drought, a Chinese think tank said on Wednesday.
Deliveries on the December contract totalled 1,138 lots on Wednesday amid scattered stopping, another bearish input for wheat futures prices. Technical support in the March contract at $5.08-3/4 per bushel was broken, driving the contract to a session low of $4.75 per bushel.