Soft red winter wheat futures at the Chicago Board of Trade closed higher on Tuesday on short covering after the market's recent drop to five-month lows, traders said. Also supportive was news that Egypt bought 144,000 tonnes of wheat, including 60,000 tonnes of US soft red winter wheat, at its latest tender. The rest was of Russian origin.
While the US sale to Egypt amounted to a single cargo, the business could be a signal that US prices have dropped far enough to attract additional interest. "Some people feel we are cheap enough now," one CBOT floor trader said.
CBOT May wheat ended up 7-3/4 cents at $4.62-3/4 per bushel, with buy-stops lifting the contract to a session high of $4.64. New-crop July closed up 6-1/4 cents at $4.76-1/4, with December up 6-1/2 at $4.99. Funds bought 3,000 contracts, traders said.
Volume was estimated by the CBOT at 50,167 futures and 6,983 options. May wheat remained below all key moving averages, with first key resistance at the 200-day MA of $4.68-1/4.
The nine-day relative strength index for May stood at 33 ahead of the open, near the 0-to-30 range that chart-based traders view as an oversold signal. The RSI rose to 43 by the close.
The market's advance was limited by ideal crop weather in the US Plains, which should promote the growth of hard red winter wheat, the largest US wheat class.
State crop reports issued late Monday by the US Department of Agriculture underscored the favourable conditions.
In Kansas, the top US wheat state, 70 percent of the crop was rated in good to excellent condition, up from 60 percent the previous week. Wheat ratings also improved in Oklahoma and Texas.