Soft red winter wheat futures at the Chicago Board of Trade closed lower on Thursday, dropping to 5-1/2-month lows toward the close on technical selling by commodity funds, traders said.
Wheat was pressured by a late, fund-driven sell-off in corn, triggered when CBOT May corn fell below the psychologically significant mark of $4 per bushel. May corn ended at $3.97-3/4, its first sub-$4 close since January.
May wheat settled down 7-3/4 cents at $4.55-1/2 per bushel after touching $4.55, its lowest point since September 28. The market opened firm but quickly turned lower on a lack of follow-through buying. July wheat ended down 6-1/2 cents at $4.69-1/2 and December was down 5 at $4.91. Funds sold 4,000 contracts of wheat and 5,000 corn, traders said.
Volume was estimated by the CBOT at 60,011 wheat futures and 9,048 options. Weak underlying fundamentals hung over the wheat market, including sluggish export demand. Traders said Egypt's rejection of US grain this week in favour of 120,000 tonnes of Russian wheat was a bearish sign. "Soft red winter wheat was offered cheaply to Egypt, and we could not sell the product," one CBOT trader said.
The US Department of Agriculture reported weekly export sales of US wheat at 486,900 tonnes, near the low end of a range of estimates for 400,000 to 600,000 tonnes. In overnight business, Japan bought 116,000 tonnes of US, Canadian and Australian wheat at its regular weekly tender. South Korea bought 22,600 tonnes of US wheat. Favourable weather in the US Plains HRW wheat belt added pressure. DTN Meteorlogix said rains and warm temperatures next week would help the hard red winter wheat crop develop.
Separately, the National Oceanic and Atmospheric Administration said drought conditions would improve through June in the extreme northern Plains and parts of Texas and Oklahoma. Thursday's decline pushed CBOT May wheat into oversold technical territory, with the nine-day relative strength index at 30 after the close. Technical traders view an RSI of 30 or lower as oversold signal.