Bloomberg News

Wheat Declines as Harvests May Boost Supply, Weather Aids Crops

November 17, 2011

Nov. 16 (Bloomberg) -- Wheat fell in Chicago as harvests in Australia and Argentina may add to global supply and as rains boost yield prospects in parts of the U.S., the world’s largest exporter of the grain.

March-delivery wheat declined 0.9 percent to $6.42 a bushel on the Chicago Board of Trade by 2:14 p.m. Paris time. Prices are down 19 percent this year.

Western Australia’s wheat production may double to 9.24 million metric tons, more than the 9.12 million tons expected last month, the Grain Industry Association of Western Australia forecast. Southern Hemisphere harvesting will add to supply already boosted by bigger crops in Russia and Ukraine.

“Export activity looks complicated in the second part of the campaign with the arrival of Southern Hemisphere origins, adding to availability that is already great due to good harvests in the Black Sea basin,” Paris-based farm adviser Agritel wrote in a report today.

U.S. wheat exports are forecast to slump to 26.54 million tons in the 2011-12 season from an estimated 35.1 million tons a year earlier, the Department of Agriculture said Nov. 9.

“Competition from the Black Sea and beyond will limit U.S. export hopes as we approach 2012,” Dave Norris, an independent U.K. feed trader, wrote in a note on his website today. “Export demand remains slack.”

Milling wheat for January delivery traded on NYSE Liffe in Paris added 0.7 percent to 186.25 euros ($251.10) a ton.

Rains in Argentina

Wheat crops planted in the U.S. central and southern plains may benefit from higher temperatures and recent rainfall, Telvent DTN Inc. said in a forecast yesterday. Argentina’s growing areas may have rains this weekend through early next week, helping boost soil moisture and crop development, it said.

“Dryness has been an issue,” Michael Creed, an agribusiness analyst at National Australia Bank Ltd., said by phone from Melbourne.

Rain’s effect on the U.S. winter crop will only be assessed when plants emerge from dormancy around March and yield estimates are clearer, he said. “That’s when risk premiums start coming out of prices.”

Rains in Argentina may also help farmers in the world’s second-largest corn exporter accelerate planting, easing the global shortage and pushing prices lower, Creed said.

Argentine growers will increase sowing 6.8 percent to 4.87 million hectares (12 million acres) because of the grain’s “improved price competitiveness,” Hamburg-based researcher Oil World said yesterday in a report. In Brazil, sowing will gain 5.1 percent to 14.6 million hectares, according to the report.

Corn for delivery in March fell 0.8 percent to $6.4925 a bushel in Chicago. Soybeans for delivery in January declined 0.5 percent to $11.945 a bushel.

--With assistance from Aya Takada in Tokyo and Tony C. Dreibus in London. Editors: Dan Weeks, John Deane.

To contact the reporters on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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