Wheat futures fell to a six-month low on mounting concern that export demand is slowing for supplies from the U.S., the world’s biggest shipper.
Export sales totaled 13.2 million tons from June 1 through Dec. 20, down 13 percent from the same period a year earlier, U.S. Department of Agriculture data show. While shipments jumped 55 percent in the most recent week, the most since January 2011, more gains are needed to change market sentiment, said Frank J. Cholly, a senior commodities broker at RJO Futures in Chicago. Short positions, or bets on lower prices, exceeded longs by 11,899 wheat futures and options as of Dec. 24, the most-bearish since May, government data show.
“We need a more compelling demand story to move the market higher,” Cholly said by telephone. “Buyers have to step up to the plate sooner or later. It’s cheap enough now.”
Wheat futures for March delivery fell 2.9 percent to settle at $7.5525 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest decline since Dec. 11, after touching $7.525, the lowest for a most-active contract since June 29. Prices tumbled 9.9 percent in December, the biggest drop since September 2011.
Even with the decline last month, the grain ended 2012 up 19 percent for the year, and reached a four-year high of $9.4725 on July 23 as drought cut output in countries including the U.S. and Russia.
Wheat’s fourth-quarter slump makes the commodity an attractive investment because drought conditions persist in the U.S. and may affect production next year, Cholly said.
“I’d like to own wheat after this type of correction,” he said. “We don’t have any snow here, and we’re still in a drought. We planted into dry soils. If I’m an end-user, now’s a good time to be buying.”
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.