Wheat Futures Resume Rally as United Nations Cuts Global Output Forecast
Aug. 31 (Bloomberg) -- Hussein Allidina, head of commodities research at Morgan Stanley, discusses the outlook for crude oil, wheat and corn prices. Allidina talks with Scarlet Fu on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)
Wheat rose in Chicago as rain reduced the quality of German grain, which competes with U.S. wheat in export markets, and after the United Nations cut its crop outlook for a second time since June on drought in Russia.
December-delivery wheat gained 2 percent to $6.9925 a bushel on the Chicago Board of Trade at 2:14 p.m. Paris time, after slumping 2.7 percent yesterday. European milling-wheat futures traded in the French capital fell for the first time in six days.
Western Europe received “abundant” rain between Aug. 9 and Aug. 29 as grains matured, hindering harvesting and reducing quality, the European Union’s farm-weather monitoring unit said in a report dated yesterday. Parts of Germany got two to three times the normal amount of rain, it said.
German wheat buyers are purchasing U.S. bread wheat for the first time in three years “as a consequence of the poor quality of their harvest,” Paris-based farm adviser Agritel said on its website today.
Milling wheat for November delivery fell 0.1 percent to 227.50 euros ($291.04) a ton on NYSE Liffe in Paris.
The UN Food and Agriculture Organization cut its outlook for the 2010-2011 world wheat harvest to 646 million metric tons, from 651 million tons in August and 677 million tons in June. Output was 681 million tons last year, the agency said in a report dated today.
“Expectations on supply have concerned the market,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said by phone.
The FAO cut its outlook for Russia’s wheat crop to 43 million tons from 48 million tons in August. Russia’s drought wiped out grain crops across 27 percent of the planted area this year, the agriculture ministry said Aug. 27, and the country banned grain exports until the end of the year.
Planting conditions in southern Volga and most of the Southern federal district, which accounts for about a third of the country’s grain crop, continue to be unfavorable because of insufficient soil moisture, Russia’s Federal Hydrometeorological Center said on its website yesterday.
“Each week that goes by, as the Russian winter wheat crop must soon be drilled, our concern rises,” economist Dennis Gartman said in his daily newsletter. “It is time to quietly begin buying wheat.”
Corn Gains
December-delivery corn gained 1.4 percent to $4.455 a bushel and soybeans for November delivery advanced 0.4 percent to $10.14 a bushel.
Rough rice for November delivery rose 1.1 percent to $11.465 per 100 pounds in Chicago.
The FAO reduced its global rice output estimate this year to 467 million tons, from 472 million tons in June, after flooding curbed the Pakistan crop.
A lower harvest in Pakistan may reduce global exports to 29 million tons next year, from 30 million tons this year, it said. Pakistan was last year’s largest rice exporter after Thailand and Vietnam, according to the Rice Market Monitor report of the FAO released in July.
To contact the reporters on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net. Luzi Ann Javier in Singapore at ljavier@bloomberg.net
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