Wheat futures at the Chicago Board of Trade closed lower on Tuesday on a late wave of fund selling the drove the market into technical sell-stops, traders said.
Traders said there were no changes in wheat fundamentals to drive the market and continued to cite the overall sufficient global supply of wheat to meet the current demand.
CBOT wheat closed 4 to 6-1/4 cents per bushel lower. September was down 5-1/2 at $3.10-1/4. December was down 6-1/4 at $3.25.
Traders said the fund selling totalled between 5,000 and 6,000 lots. Funds already were holding a record or near-record short position in wheat prior to the sell-off Tuesday.
Short-covering after Monday's decline and export news may have given the market a bit of a lift earlier in the day. The US Agriculture Department confirmed early Tuesday that Iraq had bought US wheat. The market had been rife with rumours that Iraq had purchased wheat from the United States and Australia.
Wheat fell to 3-month lows on Monday, largely due to plunging soy and corn amid aggressive fund selling, pit sources said. Signs of increased inquiry by importers for US wheat at the current lower prices gave wheat a light boost on Tuesday.
Also on Tuesday, AWB Ltd of Australia said it was still negotiating deals to supply wheat to Iraq. A Reuters report from Amman late Monday said Iraq had bought 600,000 tonnes of Australian wheat and 600,000 tonnes of American wheat.
But the AWB said there was still no deal and traders said that Iraq's wheat-buying system is still in a chaotic state, despite the newly elected government in Baghdad.
And Industry officials at a grain conference in Malaysia said on Tuesday China will need to import wheat despite this year's bumper winter crop. They said the country is facing a shortage of high quality grain demanded by its flour millers.
Crop weather in the US Northern Plains remained overall satisfactory for harvest of the 2005 US spring wheat crop, Meteorlogix weather service said on Tuesday.
The Agriculture Department said Monday 42 percent of the spring wheat crop had been harvested - above the 23 percent of a week ago and above the 5-year average of 38 percent.
USDA also said 64 percent of the spring wheat crop was in good to excellent condition. That's below the 67 percent rating a week ago and below the 66 percent rating of a year ago.
Cash basis bids for SRW wheat in the Midwest were steady at interior Midwest locations but weaker along the river, cash dealers said.
Technical support in the September contract at $3.11-1/2 per bushel was broken near the close, driving the contract to a session low of $3.10. Resistance at $3.20-1/2 was broken early in the session, driving the contract to a session high of $3.21-1/2.
The nine-day relative strength index for September stood at 29. Technical traders view an RSI of 30 or less as an oversold market and 70 or more as an overbought market.
The September contract closed at a 3-month low and was well below all of its key moving averages.
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