Wheat futures fell, erasing earlier gains, on speculation that grain demand will ease after prices jumped almost 10 percent last week.
Wheat dropped in tandem with corn futures. Both grains are used in livestock feed. Corn declined as much as 2.3 percent following a 16 percent jump in the previous three sessions after the U.S. Department of Agriculture lowered its forecast for global grain supplies.
“Corn really tipped the scales here, wanting to sell off, and then wheat sold off with it too,” said Lane Broadbent, a vice president of KIS Futures Inc. in Oklahoma City.
Wheat futures for December delivery fell 7.25 cents, or 1 percent, to close at $7.0275 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price rose as much as 1.7 percent.
The commodity has jumped 46 percent since the end of June. Russia banned grain exports in August following the most-severe drought in five decades.
On Oct. 8, the USDA slashed its estimate for corn production by 3.8 percent from a month earlier. The agency cut its estimate for global wheat supplies by 1.8 percent.
Wheat also dropped today on signs that beneficial weather will boost crops.
“Spotty, locally heavy” rains fell on winter-wheat areas yesterday from Kansas to Kentucky, and sections of the Midwest were receiving more rain today, Allen Motew, a meteorologist at QT
Weather in Chicago, said in a report.
“We’re into planting season now, and there’s dry weather concern around, but we’ve got another 60 days before we really get into big trouble,” Broadbent said. “If you get planted before Christmas, you can still raise a crop.”
The dollar’s slump has boosted the appeal of grain sales from the U.S., the world’s biggest exporter.
Today, the greenback approached a nine-month low against a against a basket of six currencies. U.S. exporters sold 100,000 metric tons to Iraq for delivery in the year that began June 1, the USDA said.
“We’ve got a dollar that’s been weakening, and that’s going to help make U.S. wheat prices more attractive,” said Dan Kuechenmeister, the manager of the commodities department at RBC Dain Rauscher in Minneapolis. Exports have been cut way back from Eastern Europe and the former Soviet Union, so the number of shops somebody can go to buy wheat seems to be dwindling.”
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.
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