US wheat futures closed lower on Monday, retreating after an early rally on technical selling that included profit-taking from sharp gains on Friday, traders said. Plentiful global wheat supplies and weak cash markets for soft red winter wheat added pressure. "The world is awash in wheat," one Chicago trader said.
The market drew early support from a newspaper report that Iran needs to import 1 million tonnes of wheat each month through March 2009 due to a drought. Talk of export demand from Iran also helped lift the market on Friday, along with active fund buying.
But US traders said the market already had priced in the Iran news by Monday, and they added that expectations of a record-large global crop should boost exportable supplies.
Iran may have already bought 3 million to 4 million tonnes of wheat from various suppliers including the Black Sea region and western Europe, Chicago traders said. Also bearish, Iraq likely bought 100,000 tonnes of Black Sea wheat over the weekend, Chicago traders said.
At the Chicago Board of Trade, September soft red winter wheat fell 13-1/4 cents to settle at $7.97-3/4 per bushel, with December down 12-3/4 cents at $8.21-3/4. Commodity funds were net sellers of 3,000 CBOT wheat contracts, traders said, noting some corn/wheat spreading.
At the Kansas City Board of Trade, September hard red winter wheat ended down 7-3/4 cents at $8.24-1/2 a bushel, with December down 10-3/4 at $8.47-1/4. At the Minneapolis Grain Exchange, September spring wheat fell 9-3/4 cents to settle at $8.76-1/4 a bushel, with December down 11-1/4 at $8.85.
CBOT wheat volume was estimated at 52,357 futures and 8,699 options. KCBT volume estimated at 13,592 futures. MGE volume estimated at 3,265 futures. Cash soft red winter wheat traded at the Toledo, Ohio, terminal at a new low of $1.85 under the CBOT September futures contract, underscoring weak demand, traders said.
On a bullish note, after the CBOT close, Egypt issued a snap tender to buy 55,000 to 60,000 tonnes of wheat for September 1-15. Tender results were expected Tuesday. USDA reported export inspections of US wheat in the latest week at 21.779 million bushels, within a range of trade estimates for 19 million to 26 million.
Morocco tendered to buy 307,090 tonnes of soft wheat for delivery from September. Crop scouts expect to see variable US spring wheat yields on an annual three-day tour; field inspections start Tuesday. After the close, USDA said 60 percent of the US spring wheat crop was rated good to excellent by Sunday, down from 63 percent the previous week. Traders expected a 2 point decline.
USDA also said US winter wheat was 79 percent harvested, up from 71 percent a week earlier but behind the five-year average of 86 percent. Hot weather stressing spring wheat in eastern Montana and western North Dakota. CFTC supplement shows large speculators cut their net short position in CBOT wheat to 28,827 contracts in the week ended July 22, down 6,900 lots.