Wheat slid, heading for the biggest weekly loss in four weeks, on speculation global supplies will be ample as rains ease dry conditions from Russia to Kansas.
Parts of western Ukraine may receive more than an inch (2.5 centimeters) of rain today, while storms during the weekend bring about 0.3 inch daily to western areas of Russia, AccuWeather Inc. said. Wheat prices on the Chicago Board of Trade have tumbled about 12 percent from an eight-month high on May 21 on concern that dry weather would hurt crops.
“So far, it doesn’t look like there will be a massive reduction in wheat supply,” Muktadir Ur Rahman, an economist at London-based researcher Capital Economics Ltd., said by telephone. “Russia had a decent amount of rain in some of the important areas last week, and I think they have a little more coming from this week onward.”
Wheat futures for July delivery slipped 0.5 percent to $6.405 a bushel in Chicago, heading for a 5.9 percent drop this week, the biggest decline for a most-active contract since May 4. In Paris, November-delivery milling wheat fell 0.8 percent to 209.75 euros ($259.15) a metric ton on NYSE Liffe. The contract is down 4.1 percent from an 11-month high on May 21.
Lower wheat prices may ease pressure on global food costs, which have climbed 1.5 percent this year, according to the United Nations. Wheat dropped 1.6 percent in May, while the Standard & Poor’s GSCI gauge of 24 commodities tumbled 13 percent on growing concern about slowdown in Europe.
World wheat production may total 671 million tons in the marketing year that begins July 1, down 3.5 percent from a record 695 million a year earlier, the London-based International Grains Council said May 24. Output in the U.S., the world’s biggest exporter, may total 59 million tons, up from 54.4 million a year earlier, the group said.
About 9 percent of the U.S. winter wheat crop had been harvested as of May 27, ahead of the previous five-year average pace of only 1 percent, as warm, dry weather accelerated crop development. Areas of the U.S. southern Great Plains, the biggest winter-wheat producing region, may see thundershowers daily today through June 3, Telvent DTN said.
“Harvest is going to continue to pressure wheat down,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said by telephone. “Farmers are finding very good yields out there. In fact I’m having a difficult time finding farmers who will complain about their wheat. This crop was sitting in better shape in some places and the dry weather couldn’t hurt it enough.”
Corn futures for July delivery rose 1.2 percent to $5.62 a bushel in Chicago. Prices are set to drop 2.9 percent this week.
Cheaper corn costs may mean livestock producers favor the grain over wheat in feed, said Chris Gadd, an analyst at Macquarie Group Ltd. Chicago corn reached a discount of $1.215 a bushel to Kansas City Board of Trade wheat on May 25. Hard, red winter wheat for July delivery was unchanged today at $6.65 a bushel in Kansas City.
“The corn-wheat spread has been expanding over Russian crop concerns,” Gadd said by telephone from London. “This suggests less wheat will be used in the feed ration than originally expected.”
Soybeans for July delivery fell 0.2 percent to $13.38 a bushel, set for a 3.2 percent decline this week on the CBOT.
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