BLBG: Wheat Gains as Damaging Heat in Russia Continues; Corn and Soybeans Slide
Wheat futures rose in Chicago as heat that damaged grain plantings in Russia was forecast to continue this week, raising concerns about global supply.
Wheat for September delivery gained 0.7 percent to $5.9125 on the Chicago Board of Trade at 2:14 p.m. Paris time.
“Abnormal” heat will persist in central Russia and along the Volga River through July 23, with temperatures in parts rising to 37 degrees Celsius (98.6 degrees Fahrenheit), the country’s Federal Hydrometeorological Service said.
“In Russia and Kazakhstan, a new heat wave is foreseen for the coming 10 days,” Paris-based farm adviser Agritel said in a comment on its website today. Hot weather in Europe and the Black Sea region “should support a certain firmness of U.S. prices.”
Paris-traded wheat was unchanged at 172.50 euros ($223) a metric ton after rising the past three weeks.
“There is a fundamental basis to the rally,” said Toby Hassall, an analyst at CWA Global Markets Pty, by phone from Sydney today. “The recent weather threats have certainly caused many people in the market to revise their expectations of the supply-demand balance going forward.”
Turkey’s wheat harvest, the largest in the Middle East, will be 15 percent below the 20 million tons forecast in the 2010-2011 season because of rains and flash floods this spring, Referans reported, citing Ugur Kaleli, head of the regional trade bourse in the grain-growing region of Konya.
Wheat Survey
The most-active wheat contract in Chicago may still drop to $4.94 a bushel by Dec. 31 as prospects for the second-biggest wheat stockpiles in almost a decade overwhelm damage caused by drought, a Bloomberg survey of 14 analysts showed.
December-delivery corn slumped 1.7 percent to $400.25 a bushel as some speculators and farmers locked in profits on speculation favorable weather in the U.S. and China may boost output.
The contract rose 5.2 percent in the three sessions through July 16.
“We’re seeing some selling from speculators and possibly some producers to lock in prices,” Hassall said.
China is the second-largest corn consumer and the biggest soybean buyer, while the Midwest is the largest U.S. corn and soybean growing region.
Forecasts for rainfall in the U.S. Midwest and China “will boost the crop outlook,” pushing some speculators to close long positions or bets on price gains, Hassall said.
Speculator Positions
Hedge-fund managers and other large speculators increased their net-long position in Chicago corn futures by 77,256 contractsin the week ended July 13, from a week earlier, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions outnumbered short positions by 150,573 contracts on the Chicago Board of Trade, the commission said in its Commitments of Traders report.
“Some speculative traders may be looking to take those positions off the table,” Hassall said, referring to bets prices will rise. “We’re seeing the market reevaluating those influences.”
Corn and soybean crops in the U.S., the biggest grower and exporter, are in good or excellent condition and may produce above-average yields this year, according to a survey of five Midwest states by SGS SA released July 16.
Corn that was planted earlier in the U.S. is “reaching a point where wet, dry or hot conditions have decreasing effect on yield,” SGS Crop Services said in a report.
November-delivery soybeans fell for a second day, losing 0.7 percent to $9.7775 a bushel.
To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net. Luzi Ann Javier in Singapore at ljavier@bloomberg.net
