Wheat Falls as Grains Council Leaves Output Estimate Unchanged

Wheat fell in Chicago after the International Grains Council left its production forecast unchanged, indicating output losses due to inclement weather have been accounted for. Corn and soybeans also dropped.

The IGC left its global wheat-production forecast unchanged at 644 million metric tons while raising the consumption estimate by 1 million tons. Stockpiles will total 181 million tons, down 1.1 percent from September’s estimate, the statement shows.

“We regard the upside potential for wheat prices as virtually exhausted,” Commerzbank AG analyst Eugen Weinberg said in a report today.

Wheat for December delivery fell 2.5 cents, or 0.4 percent, to $7.1575 a bushel, the first drop in six days, as of 12:11 p.m. in London. Before today, the most-active contract gained 6.6 percent this month and 7.1 percent this week.

Prices in Chicago have surged almost 50 percent since the end of June after drought destroyed Russian crops, prompting the country to ban exports. Milling wheat for November delivery on NYSE Liffe in Paris climbed 1 percent to 224.75 euros ($310.94) a metric ton, the sixth advance in a row.

Corn is headed for its biggest monthly advance since June 2008 on concern that global demand will outpace falling U.S. output.

“Fundamentally, corn will remain bullish after the U.S. government cut its forecast for crop production,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. Prices will also be supported by the outlook for higher corn and soybean imports by China, he said.

Corn for December delivery in Chicago fell 6.75 cents, or 1.2 percent, to $5.7225 a bushel, paring this month’s gain to 15 percent and this week’s increase to 2.2 percent. The most-active contract is still set for a fifth straight monthly gain.

Global production at the end of the marketing year on June 30 is expected to be 814 million tons, 1.2 percent less than last month’s forecast, the IGC said yesterday. Output in the U.S., the world’s biggest grower and exporter, will be 323 million tons, down 3.3 percent from September’s estimate, after hot weather in August hurt crops, the council said.

World corn inventories will probably total 125 million tons on June 30, 6 million tons less than predicted last month, the London-based IGC said. Demand for the grain will outstrip production by 3.2 percent, reducing stockpiles for a second year, the council said.

Shrinking Inventory

Soybeans for January delivery declined 10.5 cents, or 0.9 percent, to $12.255 a bushel in Chicago. The oilseed has climbed 11 percent this month, advancing for the fourth straight month. The price reached $12.4875 yesterday, the highest level since Sept. 4, 2008.

Rough-rice for January delivery fell 1.8 percent to $14.815 per 100 pounds after touching $15.27 yesterday, the highest price since Jan. 4. The most-active contract has gained 18 percent this month, the biggest such advance since February 2008.

Rice has jumped 53 percent since the end of June as flooding ravaged crops in Thailand and Vietnam, the world’s two biggest exporters.

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