Feb. 25 (Bloomberg) -- Wheat dropped to an eight-month low in Chicago on speculation a snowstorm in the U.S. Great Plains will help ease drought conditions before crops emerge from winter dormancy.
Parts of Kansas, Oklahoma and Texas were under a blizzard warning today, with some areas expected to get more than a foot (30 centimeters) of snow, according to the National Weather Service. While much of the central to northern Great Plains was under moderate to exceptional drought as of Feb. 19, according to the U.S. Drought Monitor, central Oklahoma northward already has snow cover from recent storms, Weather Service data show.
"A snowstorm in the U.S. Midwest has significantly increased the snow cover in the winter-wheat growing areas, which should considerably improve moisture levels in the soil when the snow melts," Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, wrote in an e-mailed report. "Winter wheat plants are in very poor condition due to the prolonged period of drought."
Wheat for delivery in May fell 0.7 percent to $7.135 a bushel by 7:37 a.m. on the Chicago Board of Trade. The grain reached $7.1275, the lowest price for a most-active contract since June 25. In Paris, milling wheat for delivery in May declined 0.9 percent to 235.25 euros ($312.76) a metric ton on NYSE Liffe.
U.S. wheat production may drop 7.4 percent this year to 2.1 billion bushels as yields fall to 45.2 bushels an acre from 46.3 bushels, the U.S. Department of Agriculture projected on Feb. 22. Kansas and Oklahoma were last year’s biggest U.S. growers of winter wheat, usually planted in the Plains beginning in September. The crops will emerge from dormancy in the coming month before harvesting starts in June.
Soybeans for delivery in May slipped less than 0.1 percent in Chicago to $14.43 a bushel. Corn for delivery in May declined 0.4 percent to $6.815 a bushel.
--With assistance from Jeff Wilson in Chicago and Rudy Ruitenberg in Paris. Editors: Dan Weeks, John Deane
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