Wheat analysts are the most bearish in a year as farmers reap a record crop that is contributing to the longest decline in global food prices since 2009.
Nineteen analysts surveyed by Bloomberg News expect prices to fall next week, three were bullish and two neutral, the highest proportion of bears since the survey began in November 2012. Global output may reach a record 696.4 million metric tons in the 2013-14 marketing year that ends in June, 5.5 percent more than forecast in September, the London-based International Grains Council said yesterday.
Prices for most agricultural commodities are plunging after growers sowed more acres and yields in the U.S., the biggest exporter, recovered from the worst drought since the 1930s. Global food costs tracked by the United Nations tumbled for five consecutive months, the longest streak since the start of 2009. That will help diminish what the international group estimates is an annual food-import bill exceeding $1 trillion.
"The bloom is off the agricultural markets," said Dan Basse, the Chicago-based president of AgResource Co., a research company. "We are in a period where farmers have ramped up supplies around the world and global demand growth is relatively stagnant compared with production. 2014 will be a year of adequate supplies moving toward surplus."
Wheat, the best-performing commodity in 2012, fell 15 percent to $6.6475 a bushel on the Chicago Board of Trade this year. The Standard & Poor’s GSCI gauge of 24 raw materials dropped 4.4 percent and the MSCI All-Country World Index of equities gained 17 percent. The Bloomberg U.S. Treasury Bond Index lost 1.9 percent.
Prices fell 6.5 percent since reaching a four-month high of $7.1125 on Oct. 21 because of easing concern about winter-wheat planting in Ukraine and Russia, which had been delayed by rain. Futures are still retreating after India, the biggest grower after China, reduced its export price this week, which may stimulate shipments.
"Fundamentally it is pretty bearish," said Dan Hofstad, a risk management consultant at INTL FCStone Ltd. in London. "It looks like the situation in eastern Europe was maybe not as bad as perceived a month or two ago. The other story at the forefront is the Indian wheat export program, and what that means for extra volume on the market."
The International Grains Council raised its estimate for combined production from countries in the former Soviet Union by 1.6 percent to 102.5 million tons, as higher production in Kazakhstan offset smaller-than-expected output in Russia.