Wheat futures headed for the biggest loss in two weeks after the U.S. government increased its outlook for American inventories.
Domestic stockpiles will reach 814 million bushels in the season that ends in May, the U.S. Department of Agriculture said Wednesday in a report. That compares with 793 million estimated last month. Analysts in a Bloomberg survey forecast 794 million, on average.
The agency also said that American production of the winter variety will be bigger than analysts expected, even after some fields flooded from Texas to Nebraska. Production is forecast at 1.505 billion bushels in the year that began June 1, the USDA said. Traders surveyed by Bloomberg News expected output of 1.466 billion.
“This report eases traders’ concerns over weather worries,” Terry Reilly, a senior commodity analyst at Futures International in Chicago, said in a telephone interview. “Wheat production in the U.S. and world didn’t decline.”
Wheat futures for July delivery fell 3 percent to $5.165 a bushel at 11:52 a.m. on the Chicago Board of Trade. Prices climbed in May for the first time in three months on global supply concerns.
World inventories will total 202.4 million metric tons in the season that started on June 1, the USDA said. Analysts in a Bloomberg survey forecast 202.36 million tons, on average. The agency increased its projection for global production by 0.4 percent.
Wheat supplies have climbed at the same time that corn and soybean output rose. A glut of grains has pushed global food prices to a five-year low and is helping to keep inflation in check.
The USDA said that global corn inventories after this year’s North American harvest will be 1.7 percent bigger than estimated in May. Domestic inventories will also be larger than projected last month in the U.S., the world’s top grower of both grains.
On the CBOT, corn futures for July delivery dropped 1.7 percent to $3.5875 a bushel, heading for the biggest loss since April 24. Prices tumbled 19 percent in the 12 months through Tuesday, reducing costs for buyers including Tyson Foods Inc. and Archer-Daniels-Midland Co.
Soybean futures traded little changed in Chicago.
“The big world corn supply is the story,” Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “There is no shortage this year, and the weather right now looks pretty good for the U.S. crop in the ground.”