US wheat futures closed mostly lower on Wednesday as the Chicago and Kansas City markets continued a downward correction from historic highs set early this week, traders said. "There is still an overriding sense that wheat has over-extended itself, and could be due for a period of consolidation," Iowa Grain analyst Gavin Maguire said.
A slowdown in wheat export business this week added to the weak tone. "There is no business. Export sales tomorrow are probably going to be disappointing," a Chicago trader said. The exception to the weak trend was the Minneapolis Grain Exchange, where the spot March spring wheat contract rose the expanded 90-cent limit to $17.63 per bushel, a new high for any US wheat contract.
Very scarce supplies of US spring wheat continued to drive up the Minneapolis market, along with a scramble by traders to exit short positions. The exchanges in Minneapolis and Kansas City increased daily trading limits to 90 cents starting Wednesday after several contracts fell the 60-cent limit on Tuesday. But the limit in Chicago stayed at 60 cents.
At the Chicago Board of Trade, March wheat closed 15-1/2 cents lower at $9.91-1/2 per bushel. Deferred months ended down 15-3/4 to 33 cents. Spread trade was hectic at the close as index funds rolled about 40 percent of their long positions in CBOT March wheat forward. The fund roll typically occurs on the fifth through the ninth business days of the month, but several limit moves in wheat futures during that period prevented the roll.
As a result, funds had to roll the rest of their March positions on Wednesday. At the Kansas City Board of Trade, March hard red winter wheat settled 4-1/2 cents lower at $10.41 a bushel, while back months were down 10 to 54-3/4 cents.
At the Minneapolis Grain Exchange, March spring wheat closed up the 90-cent limit at $17.63. Options indicated the contract was valued at $17.80 at the close, up an additional 17 cents.
Back months in Minneapolis closed up 2-1/2 cents to down 70 cents. Hedge-related selling pressured new-crop contracts as farmers forward-sold part of their expected 2008 spring wheat crop, traders said. Ideas that importers are backing away from high wheat prices hung over all three US markets.
Flour industry officials in Tokyo said Japan was considering buying cheaper, lower-protein wheat. And India's trade secretary said the country has no plans to import wheat before July-August due to adequate stocks.
However, after the close of the futures markets, Egypt issued a snap tender for 55,000 to 60,000 tonnes of US, French, Australian, Canadian, German, Argentine and/or Kazakh wheat for shipment March 15-31.
Egypt cancelled a tender earlier this week, a move traders had taken as a sign that prices were too high. Traders noted rumours of possible US imports of high-protein German wheat. But some were skeptical of the talk, citing logistics problems and the fact that such a move would be politically unpopular in the United States.