Thursday, September 16, 2010

Wheat Gains for First Time in Three Days as Drought Slows Russian Planting

Wheat advanced for the first time in three sessions as grain plantings in Russia, the world’s third-largest wheat grower last season, lagged behind last year’s pace and recent declines lured buyers.

December-delivery wheat rallied as much 1.5 percent to $7.3775 a bushel on the Chicago Board of Trade, after slumping 2.5 percent in the past two days. The contract was at $7.3425 a bushel at 10:51 a.m. Singapore time.

Farmers in Russia have planted 5.8 million hectares (14.3 million acres) of grains so far this season, compared with 10.8 million hectares in the same period last year, the country’s Agriculture Ministry said yesterday.

“The Russian planting pace is slower than the market hoped,” Michael Pitts, a commodity sales director at National Australia Bank Ltd., said by phone from Sydney. “That’s providing some underlying support.”

The Russian wheat harvest was at 34.3 million tons from July 1 through Sept. 16, the ministry said, compared with the 48 million tons reported by the government in the same period last year. Yesterday’s harvest estimate by the ministry didn’t provide a comparison with the previous year.

Total grain harvests were 51 million tons as of yesterday, the ministry said. That compares with 77.4 million tons in the same period last season, according to the 2009 report.

Wheat declined in the past two days after rain improved soil moisture in the southern Great Plains as farmers prepare to plant winter crops in the U.S., the world’s largest exporter, and the Australian government forecast its wheat harvest to rise to 25.1 million tons, the third-biggest on record.

‘Bargain Hunters’
“There’s certainly been a range of buyers who are looking for a fall-off in the market,” Pitts said. “We’re certain to see bargain hunters out there.”

Prices have fallen 15 percent since trading at a 23-month high of $8.68 a bushel on Aug. 6, the day after Russia announced a ban on exports that was later extended through next year.
December delivery corn was unchanged at $4.9525 after gaining for the past five days. Corn futures have advanced 13 percent this month, outpacing wheat’s 7 percent advance, as investors boosted bets on price gains.

The U.S. Department of Agriculture has cut its estimates for U.S. and worldwide inventories every month since May, as drought or excessive rains in some of the world’s largest exporters slashed harvests of wheat and barley. To meet livestock-feed requirements, buyers may turn to the U.S., which accounts for more than half of global corn exports, according to USDA data.
That will take corn inventories in the U.S. before next year’s harvest to about 9.8 percent of domestic consumption, the lowest level in 15 years.

“There’s a very good fundamental story that hasn’t quite made a bit of a run, and that’s attracting investor interest” in corn, Pitts said.

November-delivery soybeans climbed as much as 0.4 percent to $10.465 a bushel, before trading at $10.4525. 

To contact the reporter on this story: Luzi Ann Javier in Singapore at

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