Wheat futures at the Chicago Board of Trade closed lower on Wednesday on a setback from the fund short-covering rally on Monday, traders said. Fund selling on Wednesday was estimated at 2,000 to 3,000 lots and analysts and traders continue to cite the plentiful stocks of wheat globally to meet demand as the overriding reason thwarting attempts to rally prices. March wheat closed 6-3/4 cents lower at $2.92-1/2 per bushel. Other months closed 5-1/2 to 7-3/4 cents per bushel lower.

Spreading was active as firms rolled their March positions before first notice day on February 28. That accounted for the bulk of the trade.

Volume was large estimated at 52,029 futures and 6,307 options.

Exports were routine overnight and included South Korean flour millers' tender to buy 24,000 tonnes of US wheat. Wheat traders said some large-scale export bids and/or purchases were needed to sustain gains in wheat futures prices.

Several countries continue to report bumper wheat crops. Romania expects to reap 8.0 million tonnes of wheat this year, thanks to ideal growing conditions, after a bumper harvest of 7.7 million tonnes in 2004.

Cash basis bids for SRW wheat in the Midwest were unchanged and farmer selling was slow.

The March contract closed Tuesday on its 50-day moving average of $2.99-1/4 per bushel. The market opened below that level on Wednesday and the session low of $2.92 was just below the 20-day moving average of $2.93-1/4 per bushel.

The nine-day relative strength index was nearing overbought status and closed Tuesday at 58.

Technical support in the March contract at $2.97-1/2 per bushel was broken, driving the contract to a session low of $2.92. Resistance was at $3.01-1/2.

Copyright Reuters, 2005