Wheat futures fell in Chicago on speculation that global supplies will be sufficient, even as adverse weather threatens some crops, because a surge in prices this year may curtail demand.
Global stockpiles will total 176.72 million metric tons on May 31, up from 172.51 million forecast last month, the U.S. Department of Agriculture said Dec. 10. Prices have jumped 59 percent since the end of June after drought damaged crops in Russia and Ukraine and rains reduced output in Australia and Canada, increasing demand for supplies from the U.S.
“World wheat supplies are more than adequate at current prices,” said Dale Durchholz, the senior market analyst for AgriVisor LLC in Bloomington, Illinois. “The market overshot the production losses.”
Wheat futures for March delivery fell 4.5 cents, or 0.6 percent, to settle at $7.65 a bushel at 1:15 p.m. on the Chicago Board of Trade, the first drop in three sessions.
Prices earlier rose on speculation that dry weather threatens to reduce yields in the southern Great Plains where the majority of U.S. winter grain is grown.
Some fields from west Texas to Nebraska have received less than 40 percent of normal rainfall during the past 45 days, with dry weather expected the next 30 days, MDA EarthSat Weather in Rockville, Maryland, said in a report today. Abundant precipitation is needed to replenish depleted soil moisture prior to crops emerging from dormancy in February to prevent significant crop stress, the private forecaster said.
“Dryness in the Plains is a potential threat to production,” AgriVisor’s Durchholz said. “Final yields will be determined by rain” from February to May, when crops begin to develop grain, Durchholz said.
Winter varieties account for about 70 percent of all wheat grown in the U.S. Hard-red strains, traded on the Kansas City Board of Trade, are produced in the southern Great Plains from Kansas to Texas and are used to make bread and flour. Soft-red winter wheat, used in cookies and cakes, is seeded in the eastern Midwest from Arkansas to Ohio and traded in Chicago.
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.
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