Wheat Has Longest Rally in Seven Weeks on Supply Outlook
Wheat rose, capping the longest rally in seven weeks, after the U.S. Department of Agriculture lowered its forecast for global stockpiles and said domestic cattle producers will use more of the grain as livestock feed.
Global stockpiles will be 173 million metric tons on May 31, down from 176.71 million estimated on Sept. 12, the USDA said today in a report. World production was forecast at 653.05 million tons, down 0.9 percent from last month. About 315 million bushels in the U.S. will be fed to cattle, up from last month’s estimate of 220 million, the USDA said.
“The wheat crop in Russia is down, Canada is down, Australia is down,” Jason Britt, the president of Central States Commodities Inc., a Kansas City, Missouri-based broker, said in a telephone interview. “There seems to be a trend.”
Wheat futures for December delivery rose 1.9 percent to settle at $8.86 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Sept. 28. The price gained for the fourth straight day, the longest rally since late August. The grain has climbed 41 percent since mid-June after a drought scorched the Midwest.
Australian production was forecast at 23 million tons, down 12 percent from September, and Russian output was cut to 38 million tons from 39 million, USDA data show. Canadian farmers will harvest 26.7 million tons, down from 27 million estimated last month. The U.S. was expected to be the top exporter this year, followed by Canada, Australia and Russia.
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
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