Since prices broke out of the five-month sideways pattern on Dec.1l, KCBT March wheat contract prices have declined about 80 cents.

At this writing, the Kansas City Board of Trade March contract price is $8.15. The KCBT March contract price has support at about $8 and resistance at about $8.50.

Prices may have been driven lower by fund traders liquidating long (bought) wheat contract positions. The fund sales have taken place with little change in the U.S. and world wheat supply and demand situations.

Over the last month, fund investments (number of bought contracts) in grain commodities have declined significantly.

After the Dec. 11 USDA World Agricultural Supply and Demand Report (WASDE) was released, fund traders may have realized that adequate supplies of wheat were available relative to demand and that U.S. wheat prices were too high. Until late November, U.S. hard red winter (HRW) wheat was above the world price.

Wheat exports support this scenario. In the December WASDE, the USDA lowered projected 2012/13 marketing year wheat exports from 1.1 billion bushels to 1.05 billion bushels, the same as 2011/12 wheat exports.

The latest USDA wheat export report indicates that total U.S. wheat exports are about four percent less than last year. Hard red winter wheat exports are five percent less than last year. Current USDA projections are for HRW wheat exports to be about 20 percent higher than last year. Lower wheat prices may result in an increase in HRW wheat export sales.