Wheat futures fell the most in almost three months as rain in the U.S. Great Plains improved the prospects of winter crops.
As much as 2 inches (5 centimeters) of rain fell last night in parts of Texas, Oklahoma and central Kansas, the largest winter-wheat state, according to QT Weather. Parts of those states have received 25 percent of normal rainfall in the past 30 days, National Weather Service data show. Wheat prices also declined on speculation that China’s moves to rein in its economy will reduce commodity demand.
“The market is going to see a pretty good rain over probably two-thirds of the winter-wheat area,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. “It’s probably going to be a negative factor.”
Wheat futures for March delivery dropped 34.5 cents, or 4.6 percent, to settle at $7.095 a bushel at 1:15 p.m. on the Chicago Board of Trade. That marked the biggest decline for a most-active contract since Aug. 16. For the week, wheat dropped 2.6 percent, after two straight weekly gains.
The grain also fell as traders were “getting caught up in general commodity selling” amid speculation that China’s consumption will decline, Glenn said. The Thomson Reuters/CRB Index of 19 raw materials slumped the most in 18 months.
China’s central bank may raise interest rates within weeks after inflation accelerated to the fastest pace in 25 months in October, according to a Bloomberg News survey. China is the world’s largest consumer of wheat and soybeans and is second in corn consumption, after the U.S.
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.