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Wheat Drops to One-Week Low as Rains May Boost U.S. Plains Crop

March 20 (Bloomberg) -- Wheat futures fell to a one-week low on signs that rains in the U.S. Great Plains this month have improved prospects of winter crops emerging from dormancy.

Fifty-four percent of the crop in Kansas was in good or excellent condition as of March 18, up from 53 percent a week earlier, the U.S. Department of Agriculture said yesterday. Conditions in Oklahoma and Texas also improved. Northeast Texas, south-central and eastern Oklahoma and southeast Kansas got as much as 3.5 inches (8.9 centimeters) of rain since yesterday, and showers may linger until March 22, Telvent DTN forecast.

“We’re pressured by the forecast for rain in the winter-wheat belt,” Brian Hoops, the president of Midwest Market Solutions in Springfield, Missouri, said in a telephone interview. The rain “is exactly” what the crop needs, “as long as we don’t get any low-level type flooding,” he said.

Wheat futures for May delivery fell 1.5 percent to settle at $6.425 a bushel at 1:15 p.m. on the Chicago Board of Trade, after reaching $6.40, the lowest since March 12.

Prices dropped 2.9 percent yesterday, after Russia’s First Deputy Prime Minister Viktor Zubkov said the country has enough grain to export 27 million metric tons this marketing year and won’t need to limit shipments. Russia resumed exports in July, ending a 10-month ban imposed after a drought in 2010.

“The Russians are saying they’re not going to have export controls,” pressuring wheat futures, Lawrence Kane, a market adviser at Stewart-Peterson Group, said by telephone from Yates City, Illinois. “They’re trying to show the rest of the world that when supplies get tight, they’ll still keep selling, because they want to be known as a reliable supplier again.”

Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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