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Wheat Rises After U.S. Cuts Global, Domestic Inventory Forecasts

February 10, 2014
USDA wheat harvest 2
  

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 were little changed.

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 1.6 percent to $5.865 a bushel at 12:40 p.m. on the Chicago Board of Trade, heading for the biggest gain since Feb. 4. The most-active contract touched $5.50 on Jan. 29, the lowest since July 2010.

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. "You’re still seeing a large short there from the managed-money crowd."

Higher production signals "an overall bearish picture," Grow said. "The report wasn’t earth-shattering."

Corn futures for March delivery added 0.1 percent to $4.445 a bushel, after touching $4.49, the highest since Oct. 8.

Soybean futures for March delivery slid 0.1 percent to $13.3025 a bushel.

 

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RELATED TOPICS: Wheat, Marketing, USDA

 
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