Wheat Declines to Two-Month Low as Slowing Global Economy May Curb Demand
Wheat slumped to the lowest price in more than two months in Chicago, and corn and soybeans also declined, on increasing concern that slowing global economic growth will weigh on demand.
December-delivery wheat dropped as much as 3 percent to $6.47 a bushel on the Chicago Board of Trade, the lowest for a most-active contract since July 12, and traded at $6.4775 a bushel at 11:33 a.m. Paris time.
The U.S. Federal Reserve yesterday cited “significant downside risks” to the economic outlook, including strains in global financial markets. Two days ago, the International Monetary Fund cut its global growth forecast and predicted severe repercussions if Europe fails to contain its debt crisis or U.S. policy makers become deadlocked over fiscal plans.
“The operators are worried about demand for agricultural commodities, with global growth again revised downwards in the past days,” Bourges, France-based farm adviser Offre et Demande Agricole said in a daily e-mailed comment.
Milling wheat for November delivery dropped as much as 2.5 percent to 191.75 euros ($259.40) a metric ton on NYSE Euronext in Paris, the lowest since Aug. 10.
Corn for December-delivery fell 2.4 percent to $6.695 a bushel in Chicago. November-delivery soybeans dropped 1.9 percent to $12.96 a bushel.
“We’re seeing a big sell-off in risk financially across commodities,” Michael Pitts, commodity sales director at National Australia Bank Ltd., said by phone from Sydney. “That’s really a major driver in the short-term.”
Economic uncertainties are overshadowing concerns about weather-related risks to global grain supply, Pitts said.
Wet and cool conditions that are unfavorable for maturing crops may prevail in the northern U.S. plains over the next few days, Telvent DTN Inc. said in a forecast yesterday.
“The weather situation in the U.S. hasn’t necessarily improved,” Pitts said. “That should be supportive for the market, but we’re not seeing that.”
Corn farmers in the U.S., the largest grower and exporter, are harvesting at a slower pace than last year after cold weather hindered crop maturity in fields already delayed by planting-season rains.
An estimated 10 percent of the corn crop in the U.S.’s top 18 producing states had been harvested as of Sept. 18, less than the 18 percent pace of a year earlier and the previous five-year average of 11 percent, the U.S. Department of Agriculture said Sept. 19. About 51 percent of the crop was in good or excellent condition, down from 53 percent a week earlier and less than 68 percent a year ago, it said.