Bloomberg News

Goldman Sachs Closes Bearish Wheat-Price Wager on Weather

August 03, 2012

Goldman Sachs Group Inc. (GS:US) said it’s closing a bearish wager on wheat prices because of worsening weather conditions for crops in the former Soviet Union, Australia, India and Argentina.

Goldman Sachs had been short wheat for delivery in May 2013 versus corn on the Chicago Board of Trade, New York-based analyst Damien Courvalin said today in an e-mailed report. The price difference closed at about 72 cents a bushel yesterday, allowing for a gain of almost 50 cents a bushel after the bank entered its bearish wager when the spread was at $1.21, according to the report.

Wheat production in the former Soviet Union, Australia, India and Argentina may be 15 million metric tons below the U.S. Department of Agriculture’s forecast in July because of dry weather, creating “growing upside risks to wheat prices in coming months,” Courvalin said. The USDA is slated to update its global crop estimates Aug. 10.

Still, global wheat inventories are likely to remain more ample than corn, meaning wheat may underperform in the next 12 months, Courvalin said. Both grains are used in livestock feed. Corn prices have surged 59 percent since mid-June as the worst drought since 1956 damaged crops in the U.S., while wheat rose 41 percent and soybeans rallied 24 percent in the same period.

The bank said it’s bullish soybeans for November delivery versus a bearish wager for December corn, as soybeans are likely “to reverse part of their recent underperformance to corn,” according to the report.

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

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


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $164.8 USD
    • 1.38
    • 0.84%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus