20000317CBOT wheat closes lower on setback and rainfall

CHICAGO: Soft red winter wheat futures at the Chicago Board of Trade closed lower Wednesday in a technical pullback and amid forecasts for beneficial rain this week in the U.S. Plains.

CBOT wheat closed 1/2 to 2-1/4 cents lower with May down 2-1/4 at $2.68-3/4.

"It was lower on technical selling after it looked overbought going into today's session," said Shawn McCambridge, analyst for Prudential Securities. "And the fundamentals showed showers going through, which will alleviate some of the immediate concern."

Concerns over dry weather coupled with U.S. government forecasts for drought this spring had lifted wheat futures on Monday and Tuesday as players built in a weather premium.

On Wednesday, Weather Services Corp. said the Kansas wheat crop should get a lift from rain Wednesday and Thursday.

The showers also will aid portions of Colorado and northern Oklahoma, but several key wheat-growing areas will be left wanting for moisture, WSC meteorologist Joel Burgio said.

"It should be beneficial for much of Kansas but it (Kansas wheat crop) was doing well anyway after the recent rains. There's still a lot of concern in southern Oklahoma and in the west Texas region," said Burgio.

Dry weather through the crop's fall seeding and winter dormancy has led to less-than-desirable condition ratings, especially in Texas.

Routine export business failed to generate much support.

Meanwhile there was news from Asia that China's winter wheat output this year was likely to be near 1999 levels, despite a decline in planted area.

Last year, China produced an estimated 11.5 million tonnes of wheat. Winter wheat accounts for about 85 percent of the country's total wheat production.

Technical traders cited support in the May contract at $2.66 and resistance at $2.74.

Funds sold 400 lots. E.D. & F. Man International sold 500 May and bought 300 May, Lehman Bros. sold 300 May. and Goldenberg Hehmeyer bought 500 May.

CBOT wheat futures volume was estimated by the CBOT at 19,000 lots, below the 32,547 lots traded Tuesday.

Wheat options volume was estimated at 4,700 lots.-Reuters