Wheat Futures Advance as Two-Day Losing Streak Lures Investors, Importers

Wheat rose in Chicago, erasing a drop, on speculation that lower prices in the past two days attracted investors and importers. Corn slipped before tomorrow’s release of a U.S. government crop report.

December-delivery wheat gained 0.5 percent to $7.1425 a bushel on the Chicago Board of Trade at 12:15 p.m. Paris time, reversing a slide of as much as 0.7 percent. Corn fell as much as 0.5 percent.

Wheat declined 4.1 percent from Sept. 3 through yesterday, even as traders and analysts expect the U.S. Department of Agriculture to pare its estimate of global supply tomorrow. Adverse weather has damaged wheat crops in exporting nations including Russia.

“It’s quite normal to have this kind of price correction after a heavy selloff,” Chung Yang Ker, an analyst at Phillip Futures Pte. in Singapore, said by phone today. “There are bargain-hunters out there seeking to lock in prices.”

The USDA may forecast that global wheat stockpiles before the 2011 harvest will drop to 171.09 million metric tons from 193.97 million tons a year earlier, according to the average estimate of 13 analysts surveyed by Bloomberg. That would be down from last month’s outlook for inventories of 174.76 million tons.

The USDA has cut its estimates every month since May, when it predicted inventories of 198 million tons.

Exports From U.S.

U.S. wheat exports in the current marketing year may be as much as 37 million tons, according to Vincent Peterson, a vice president at U.S. Wheat Associates. The USDA currently forecasts exports of 33 million tons in the year through June.

Farmers in Russia, the world’s third-largest wheat grower last season, lost between 50 percent and 60 percent of crops in the drought-stricken central and Volga River regions this year, Deputy Agriculture Minister Sergei Korolyov said today. The drought, the worst in at least 50 years, prompted Russia to ban grain exports from Aug. 15 until next year’s harvest.

Milling wheat for November delivery traded on NYSE Liffe in Paris fell 0.9 percent to 224.75 euros ($285.84) a ton.

December-delivery corn lost 0.4 percent to $4.6075 a bushel in Chicago. Soybeans for November delivery declined 0.8 percent to $10.4025 a bushel, rebounding from a slide of as much as 1.4 percent.

“Tomorrow is the USDA crop report, and the markets are breathing a little uneasily ahead of” its release, economist Dennis Gartman said in his daily newsletter. Consensus “is that the USDA will cut corn production, but only rather modestly,” he said.

Commodity prices in China, the world’s second-largest corn consumer, plunged on speculation that regulators were investigating large positions in natural rubber futures, the Securities Times said on its website, citing people it didn’t identify.

“There’s concerns about reports that the Chinese government is going to crack down on illegal trading,” said Ker at Phillip Futures. “It will affect grain imports.”

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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