Wheat dropped the most in two weeks in Chicago on speculation precipitation in the U.S. southern Plains and “significant” rains in the northern Plains will boost crop prospects. Corn declined.
Rain this week will help plants in Kansas, the second-biggest U.S. wheat grower, and in Oklahoma, Commodity Weather Group said in an e-mailed report today. About six times the normal amount of precipitation fell in parts of North Dakota, the biggest U.S. producer, and in South Dakota and Minnesota last week, National Weather Service data show.
“Our forecast includes the chance for a significant storm in much of Texas, Oklahoma and parts of southern Kansas,” the group said. “This would aid spring growth of winter wheat. The 11- to 15-day period includes another chance for a few showers in the southwestern Plains, as well as a better opportunity for needed moisture in Iowa and Minnesota.”
Wheat for May delivery slid 1.7 percent to $6.6075 a bushel by 1:39 p.m. London time on the Chicago Board of Trade. A close at that price would be the biggest decline since Feb. 21. Milling wheat for May delivery traded on NYSE Liffe in Paris fell 1.3 percent to 195.25 euros ($256.64) a metric ton.
“Significant” rain last week will ease concerns about dryness in eastern South Dakota, southern Minnesota and northern Iowa, said Joel Burgio, Telvent DTN meteorologist. “The early call on the spring season would be for mostly favorable moisture conditions for the crop over eastern areas, but with some dryness concerns in the west.”
Corn for May delivery dropped 1.2 percent to $6.53 a bushel in Chicago, declining from the highest level in almost four months on speculation farmers in the U.S. will boost production. The grain yesterday reached $6.6525, the highest price for a most-active contract since Nov. 9.
“The corn market is wary that we are expecting quite a large increase of U.S. production in 2012-13, which will be associated with sizable U.S. stockpiles,” Luke Mathews, an analyst at Commonwealth Bank of Australia, said today by phone from Sydney. “It has been weighing on the market in the past couple of months.”
U.S. farmers will plant the most acres since 1944, the Department of Agriculture said last month. Corn has advanced 1 percent this year, lagging behind a 9.4 percent rally for soybeans. Rising production will push corn stockpiles to 1.62 billion bushels at the end of 2012-13 from 801 million bushels in the prior year as demand from ethanol producers slows, the USDA said.
Soybeans for May delivery slipped 0.3 percent to $13.2125 a bushel. The oilseed fell yesterday after 10 straight advances.
“Beans are the bullish commodity and probably has the most transparent fundamentals at the time,” said Jonathan Bouchet, a trader at Boman Capital SA in Geneva. “The market has still some space to go up on soybeans, but as always it also depends on wheat and corn.”