Wheat Rebounds as Slump to Near Bear Market Weighed With USDA

June 11, 2014 03:57 AM
 
6 KatherineAnne WheatHarvestNearBurlingtonColorado

Wheat rebounded on speculation that demand will be rekindled after prices slumped to the lowest level in more than three months before a government report that may show global reserves rising to the highest in three years.

Futures for July delivery rose 0.6 percent to $6.05 a bushel on the Chicago Board of Trade by 3:56 a.m. local time after retreating to $5.9825, the lowest for a most-active contract since Feb. 28. Prices slumped 19 percent by yesterday from the 14-month closing high of $7.39 on May 6. A 20 percent drop meets the common definition of a bear market.

World stockpiles before the 2015 Northern Hemisphere harvest may be bigger than the U.S. Department of Agriculture forecast last month according to a Bloomberg survey. The USDA updates its estimate today. Australia today lowered its crop forecast to 24.6 million metric tons from 24.8 million tons on dry weather.

"Potentially $6 will offer some support," said Michael Pitts, commodity sales director at National Australia Bank Ltd. "The market is expecting more availability of grain, larger carryouts generally, bigger crops. The question is really around the hard-red winter crop and the USDA’s perception of that."

Global inventories may increase to 188.08 million metric tons, according to a Bloomberg survey. The USDA had forecast 187.42 million tons last month. U.S. farmers may harvest the smallest winter-wheat crop since 2006 after freezes damaged yields and drought conditions persisted in the Great Plains, according to a separate survey.

 

European Harvest

 

Wheat climbed 30 percent between February and April and reached this year’s peak of $7.44 on May 6 after Russia’s incursion into Ukraine increased speculation that the flow of supplies from the region would be threatened. Instead, Russia boosted shipments, including to first-time buyers Mexico, Peru, Indonesia and the Philippines, Interfax reported last week, citing Dmitry Rylko, director of market researcher Ikar.

This year, the European Union will produce 145.9 million tons, the most since 2008, according to analysts surveyed by Bloomberg. A gauge of prices for 55 food items fell 1.2 percent to 207.8 points from a restated 210.3 points in April and are down 3.2 percent from a year earlier, UN data show.

Milling wheat futures in Paris was unchanged at 190.25 euros ($257.29) a ton.

Corn for December delivery advanced 0.2 percent to $4.4575 a bushel. Soybeans for delivery in November fell 0.5 percent to $12.24 a bushel.

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