Chicago Board of Trade wheat futures closed higher on Wednesday in another day of volatile trading with supportive exports countering the early bearish impact from speculative profit taking, traders said.
CBOT wheat closed 1/2 to 3-1/4 cents per bushel higher, with March up 3-1/4 at $3.95-1/4. Trade volume was moderate estimated at 23,951 futures and 4,248 options.
The early selling was seen tied to speculative profit taking from the strong rally Monday in reaction to USDA's January crop production reports.
Last week's CFTC data had shown funds still more than two-to-one net long futures as of last Tuesday, ahead of Monday's USDA crop data.
Export activity overnight eventually buoyed prices, with Taiwan buying 85,600 tonnes of US wheat and South Korea setting a tender for 25,000 tonnes of US wheat on Thursday.
Traders said the wheat market, especially KCBT HRW new-crop contracts, continues to find underpinning from dry weather in the western US Plains HRW region. The dryness is feeding concern about potential winter-kill and a slow start this spring for the 2004 US winter wheat crop.
Although rains were forecast for late this week in parts of the US Great Plains hard red winter wheat region, the driest areas will stay dry, a private forecaster said on Wednesday.
"The bottom line is there will be some improvement in soil moisture in Texas and Oklahoma, but it appears the driest areas of Kansas and Colorado will miss out," said Meteorlogix forecaster Joel Burgio.
Technical traders were eyeing a 3-cent chart gap left on January 2 as an area of key support. The low of the gap is $3.77-1/2 and the high is $3.80-1/2. CBOT March wheat Wednesday closed at $3.95-1/4.
First support in the March contract at $3.90-1/2 was broken, driving the contract to a session low of $3.86-1/2.
Second support was at $3.85. First resistance was at $4.05-1/2 and second resistance was at $4.07.
The nine-day relative strength index for March stood at 53 prior to the open on Wednesday.
Technical traders view and RSI of 70 or more as an overbought market and 30 or less as an oversold market.
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