The Chicago Board of Trade rough rice futures dived on Wednesday, with the spot price hitting a 1-1/2 year low on follow-through technical selling, traders said. This was the second day in a row that rice fell, which came on the heels of higher closes over the past week when commodity funds covered short positions, traders said. March rice closed 22-1/2 cents lower per hundredweight at $6.49. May settled 22-1/2 cents down at $6.72, after sliding to a contract low of $6.71. Sell-stops were hit below $6.60 in March and under $6/72 in May, traders said. "Technically it doesn't look good.

I would expect that any weakness will mean more fund selling," said one CBOT rice trader.

Funds were net sellers with Reface the featured player, traders said. Man Financial and RJ O'Brien were also noted sellers.

Volume was moderate estimated at 473 futures and 80 options. That compared to 291 lots traded on Tuesday.

The weakness in futures prices this week coincided with the US Department of Agriculture dropping its weekly world market price for long grain rough rice by 7 cents to $6.39 per cwt.

Warmer, spring time temperatures this week in Arkansas, the top rice state, spurred talk of how many acres US farmers will seed to rice this spring. Low commodity prices plus concerns about soybean rust was expected to play heavily on farmers' planting decisions. Arkansas farmers can start seeding rice by late March if fields dry out by then.

Copyright Reuters, 2005