Wheat plummets on forecast of supply increase
The price of wheat dropped 3 percent Tuesday after the government predicted U.S. inventories will increase by the end of next year's growing season, in part because of weaker export demand.
March wheat fell 27.25 cents to finish at $8.215 per bushel. Corn and soybeans also fell.
The U.S. Agriculture Department predicted wheat supplies will total 754 million bushels after next year's harvest. That's 50 million bushels higher than its November forecast and 11 million bushels more than stockpile estimates at the end of this year's season.
The agency also lowered its expectations for exports, citing a slow pace of sales and shipments and what's expected to become stiffer competition from other countries.
Global inventories also are expected to increase, the agency said.
Telvent DTN analyst Darin Newsom said the revised estimates shouldn't have surprised traders because global wheat supplies already are adequate. Besides, he said, wheat can be grown just about anywhere, which increases the number of countries that sell it in the global marketplace.
Newsom said he expects wheat prices to remain under pressure until next spring when farmers will know if the U.S. winter wheat crop will be affected by dry weather.
Corn for March delivery fell 2 cents to end at $7.28 per bushel and January soybeans dropped 2.75 cents to $14.72 per bushel.
In other trading, orange juice futures jumped 3.6 percent after the agriculture agency cut its U.S. forecast for the current growing season to 9.01 million tons. That is a 4 percent drop from October's prediction and slightly less than this year's production.
Florida's orange production was estimated at 6.57 million tons. That's 5 percent less than the agency's October forecast and slightly less than this year's harvest. The government also has predicted a colder than normal winter in Florida which could affect the crop.
Orange juice futures for January delivery rose 4.55 cents to finish at $1.299 per pound.
Other commodities were mixed on expectations that the Federal Reserve may announce a revamped bond-buying plan Wednesday to maintain its support for the U.S. economy.
Gold for February delivery fell $4.80 to end at $1,709.60 an ounce and January platinum rose $16.70 to $1,640 per ounce.
In March contracts, silver fell 36 cents to $33.017 per ounce, copper fell 1.95 cents to $3.6865 per pound and palladium dropped $7.95 to $696.80 per ounce
Benchmark oil rose 23 cents to finish at $85.79 per barrel, heating oil rose 3.08 cents to $2.927 per gallon and wholesale gasoline rose 1.24 cents to $2.6105 per gallon. Natural gas fell 4.8 cents to $3.412 per 1,000 cubic feet.