Wheat Falls Most in Six Weeks on Forecast for Bigger U.S. Crop, Reserves

Wheat futures fell the most in six weeks after the government predicted that U.S. inventories will rise because of better-than-forecast production.

U.S. reserves as of May 31 will rise 12 percent to 1.093 billion bushels from a year earlier, the Department of Agriculture said today in a report. Production will be 2.216 billion bushels, more than the 2.164 billion forecast by 16 analysts in a Bloomberg News survey. Prices jumped 20 percent in the previous six sessions.

“Yields have been just as good and getting better as the harvest moves on,” said Louise Gartner, the owner of Spectrum Commodities in Beavercreek, Ohio.

Wheat futures for September delivery fell 10.5 cents, or 1.9 percent, to $5.38 a bushel on the Chicago Board of Trade, the biggest decline since May 28.

Farmers have been reporting improved yields in the southern Great Plains, where hard-red winter varieties are grown, said Jason Britt, the president of Central States Commodities Inc. in Kansas City, Missouri.

“The last couple weeks, they’ve been bumping up the yields,” Britt said. “There’s still wheat piled up on the ground here in Kansas.”

Today, the USDA lowered its world-production estimate for the current marketing year by 1.1 percent to 661.1 million tons as adverse weather in Canada and Russia hurt crop prospects.

Output estimates in Canada, where wet weather curbed seeding, were lowered 16 percent to 20.5 million tons. The USDA lowered the forecast for Russian production by 7.8 percent to 53 million tons because of hot, dry conditions.

The U.S. is the world’s biggest shipper, followed by Canada, Australia and Russia.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

To contact the reporter on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net.

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