Wheat Declines on Signs Grain Demand to Ease, Benefical Weather Forecast

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.”

Dollar’s Slide

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.

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

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Palm Oil Jumps to 26-Month High on Forecast for Lower Global Soybean Crop

Palm oil futures surged to the highest level in more than 26 months, tracking gains in soybeans, which rallied for a second day after the U.S. Department of Agriculture forecast a smaller global crop. 

The contract for delivery in December jumped as much as 6.5 percent to 2,940 ringgit ($948) a metric ton, the highest level since Aug. 1, 2008, on the Malaysia Derivatives Exchange. Prices gained for a sixth consecutive week last week, the longest winning streak since a seven-week advance ending May 8, 2009.

The U.S. soybean crop will be a record 3.408 billion bushels (92.8 million tons), compared with 3.483 billion projected in September and 3.359 billion gathered last year, the USDA said on Oct. 8. August rains failed to boost yields, prompting the government to reduce its acreage estimates.

“Crude palm oil prices may be ripe for a further upswing given the USDA’s recent downgrade of soybean crop estimates and the threat to oilseeds and edible oil supplies posed by the ongoing 

La Nina,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said in a report today.

The brokerage raised its forecast for crude palm oil prices by 9 percent to an average 2,630 ringgit a ton this year and as much as 14 percent to 2,800 ringgit for 2011. The price has averaged 2,502 ringgit this year, according to Bloomberg calculations.

Soybean futures for November delivery in Chicago gained as much as 4.4 percent to $11.8475 a bushel in Chicago, the highest price since June 5 last year. The contract traded at $11.775 a bushel at 9:06 a.m. in Mumbai.

Malaysian Exports

December-delivery soybean oil gained as much as 2.2 percent to 47.64 cents a pound in Asia, the highest level since Sept. 29, 2008. Soybean oil and palm oil are direct substitutes.

Malaysia’s palm oil exports fell 0.4 percent in the first 10 days of October to 395,015 tons from the same period in September, independent market surveyor Intertek said today.

On the Dalian Commodity Exchange, palm oil for delivery in May jumped as much as 5.6 percent to 8,184 yuan ($1,226) a ton, the highest level since Aug. 4, 2008. Dalian May-delivery soybean oil surged as much as 4.5 percent to 8,918 yuan.

CME Group Inc.’s December palm oil contract, pegged to the Malaysian benchmark price, surged as much as 5.4 percent to $938.25 a ton, the highest level since the exchange began trading the commodity in May.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net;

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

Corn Heads for Biggest Weekly Advance in Almost Four Months; Soybeans Gain

Corn advanced, heading for the biggest weekly gain in almost four months, on speculation the U.S. may cut its crop estimates after floods and hot weather damaged plants. Rice was poised for the longest winning streak in almost three years. 

December-delivery corn rose as much as 0.5 percent to $5.005 a bushel in Chicago and traded at $5.0175 at 11:49 a.m. Tokyo time. The grain has jumped 7.7 percent this week, the biggest such gain since the week ended June 11.

“Corn was supported by market forecast of a decline in the U.S. crop yields and output,” Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co., said today. The market was also underpinned by Brazil’s lower export forecast and Ukraine’s curb on grain exports, he said.

U.S. production may fall to 12.977 billion bushels from a record 13.11 billion last year, according to a Bloomberg News survey. Yields may drop 5 percent to 156.6 bushels this year, more than the 2.7 percent drop forecast in the survey, according to Farmers National Co., the largest manager of crop land.

The U.S. Department of Agriculture will update its estimates today.

Corn exports by Brazil, the world’s third-largest shipper, may fall next year to 8 million tons from an estimated 9.5 million tons this year because of a smaller harvest, Silvio Porto, a director at the Agriculture Ministry’s crop-forecasting agency, said yesterday.

Ukraine Quotas

Ukraine set quotas on shipments of all grains to ensure food security and cap domestic prices, First Deputy Prime Minister Andriy Klyuev said yesterday. The restrictions may run through the end of this year, he said. Corn exports will be limited to 2 million metric tons and wheat and barley to 500,000 tons each, he said.

The quotas may boost demand for U.S. corn, Jonathan Bouchet, an analyst and trader at OTCex Group in Geneva, said yesterday. The country is the world’s largest barley exporter and fourth- biggest corn supplier, according to the USDA data.

Rough rice for November delivery fell 0.4 percent to $12.75 per 100 pounds after climbing as high as $12.88 yesterday, the highest price since April 26. The contract has advanced 3.3 percent this week, gaining for the seventh straight week. That would be the longest winning streak since Nov. 23, 2007.

Soybeans for November delivery gained 1.4 percent to $10.7975 a bushel. Wheat for December delivery advanced 0.7 percent to $6.64 a bushel. The grain has risen 1.4 percent this week, the first weekly gain in three.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

 

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net