Wheat Rises After U.S. Cuts Global, Domestic Inventory ForecastsJeff Wilson
Wheat rose for the first time in three sessions after the U.S. government cut its forecasts for domestic and global inventories. Corn and soybeans fell.
U.S. wheat reserves on May 31 will be 558 million bushels, compared with 608 million bushels (16.5 million metric tons) forecast in January, the Department of Agriculture said today. Exports will total 1.175 billion bushels, up 4.4 percent from last month’s outlook. Prices reached a 42-month low in January on concern that bigger global harvests would overwhelm demand.
The supply “tightness was a surprise and indicates prices may have a found a bottom.” Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “It’s the kind of report that will put a floor under the market until we see how the crop emerges from winter dormancy next month.”
Wheat futures for March delivery climbed 1.3 percent to close at $5.8475 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices touched $5.50 on Jan. 29, the lowest since July 2010. The contract is for the soft, red winter variety.
Exports are increasing on demand for hard, red winter wheat, used to make bread, because of smaller supplies from Argentina and Canada, the USDA said. Futures for the variety gained 2.1 percent to $6.6275 a bushel in Chicago. The spread between the two grain contracts reached 78 cents, the widest since November 2011.
Global inventories will reach 183.73 million tons, down from 185.4 million estimated in January, the USDA said. Prices tumbled 13 percent from the end of October through Feb. 7 on signs of ample world supplies. Money managers have held a bearish position in wheat since November, and were net-short 52,963 futures and options contracts in the week ended Feb. 4, Commodity Futures Trading Commission data show.
“You’re getting a little bit of a short covering,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview. Higher production signals “an overall bearish picture,” he said. “The report wasn’t earth-shattering.”
Corn futures for March delivery fell 0.3 percent to $4.43 a bushel, after touching $4.49, the highest since Oct. 8.
Soybean futures for March delivery slid 0.5 percent to $13.255 a bushel, halting a seven-session gain.
The USDA’s forecasts for domestic and global oilseed inventories in 2014 topped analyst estimates.
“This report may well mark the top of the spring rally,” Roose of U.S. Commodities said. “World supplies are more than adequate this year.”