Bloomberg News

Wheat Rises as U.S., EU Exports May Gain as Russian Supply Drops

August 16, 2012

Wheat futures rose for a second day on speculation that demand will increase for U.S. and European grains as dry weather reduces supplies in Russia.

Farmers in Russia, the world’s third biggest wheat exporter last season, have harvested 27.9 million metric tons of the grain so far this year, 17 percent less than in 2011, as yields declined, the country’s Agriculture Ministry said today. The harvest is 52 percent complete. Egypt, the world’s biggest wheat buyer, has purchased Russian wheat in its last two import tenders, shunning U.S. and European supplies.

“It is highly likely that Russia will be out of the export market by Christmas, and probably before then,” Dave Norris, an independent grain broker in Harrogate, England, said by telephone today. “Europe and the U.S. have been missing out on export business, with Egypt buying Russian and Ukrainian wheat a day or two ago. That competition isn’t likely to be there once we get past Christmas.”

Wheat for December delivery rose 1.5 percent to $8.79 a bushel on the Chicago Board of Trade at 11:23 a.m. London time, heading for the biggest increase in a week. In Paris, November- delivery milling wheat added 1.6 percent to 260.25 euros ($319.38) a ton on NYSE Liffe.

In 2010, wheat prices surged 47 percent in Chicago and almost doubled in Paris after Russia’s worst drought in 50 years spurred the country to ban grain exports for 10 months.

Deputy Prime Minister Arkady Dvorkovich said Aug. 8 that there’s no reason for Russia to limit shipments this year, while export duties are “theoretically possible” beyond 2012. Deutsche Bank AG and INTL FCStone Inc. have warned that future restrictions may be possible, given the recent pace of Russian shipments.

Soybeans, Corn

Soybeans for November delivery fell 0.3 percent to $16.29 a bushel on the Chicago exchange. The price reached a record $16.915 on July 23 as U.S. drought damaged crops. Corn for December delivery was little changed at $8.0475 a bushel, down from a record $8.49 set on Aug. 10.

Showers and cooler temperatures this week will ease stress to pod-filling soybeans and may improve yield potential, Telvent DTN Inc. said in a report yesterday. It remains unclear how much damaged crops can recover after severe heat and dryness this summer, it said.

The USDA cut its corn production forecast on Aug. 10 to 10.779 billion bushels, a six-year low, while soybean output was reduced by 12 percent to 2.69 billion bushels.

“We’re still looking at the weather event,” Ker Chung Yang, an analyst at Phillip Futures Pte., said by phone from Singapore today. “I don’t think that’s sufficient to ease supply concerns.”

To contact the reporters on this story: Whitney McFerron in London at wmcferron1@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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