BLBG: Wheat, Soybeans Gain Second Day as Commodities Slump, Weather Lure Buyers
Wheat and soybeans advanced for a second day after the biggest slump in commodities since December 2008 lured buyers amid concerns about tightening global supplies.
The July-delivery wheat contract rallied as much as 2.6 percent to $7.7925 per bushel on the Chicago Board of trade after losing 5.2 percent last week, the biggest drop since the five days to April 15. Soybeans for July delivery added as much as 0.7 percent to $13.355 a bushel, rallying from a 4.9 percent decline last week.
“We had a massive unwinding of long commodity trades last week, and the grains markets took the brunt of the sell-off,” Jonathan Barratt, managing director at Commodity Broking Services Pty., said in an e-mail. The grains market remains “concerned on the state of world ending stocks and weather- related issues.”
The Standard & Poor’s GSCI Index of 24 futures advanced 1.6 percent to 684.88 by 3:40 p.m. in Singapore, snapping five days of losses when the index plunged 11 percent.
Hot, dry weather early this week may increase the risk to the winter-wheat crop in the central and southern plains of the U.S., Telvent DTN Inc. said in a May 6 forecast. Winter-wheat areas in western Europe and central China also need rain “to prevent significant declines” in yields, Telvent DTN said.
Drought conditions may persist through mid-May in wheat- growing areas from China, the world’s largest grower and consumer, to the U.S. and Western Europe, hurting crops and lifting prices, British Weather Services said on May 5.
Outlook Lowered
The International Grains Council lowered last month its outlook on global wheat production in the 2011-2012 season by 1 million metric tons to 672 million tons, matching global demand, because of “less than ideal conditions for some crops” in the U.S., the European Union and China. The forecast was made before France’s Agriculture Ministry said the nation had its second- hottest April since 1900 and one of the driest since 1953. France is the largest wheat grower in the European Union.
The E.U. wheat harvest, which accounts for a fifth of world production, will fall this year as drought cuts yields in France and Poland, said Michel Portier, general director of Paris-based farm adviser Agritel said on May 6.
The winter-wheat harvest in Kansas, the biggest producer of that variety in the U.S., may drop to 256.7 million bushels, from 360 million bushels last year, according to a survey of 55 analysts, millers and industry officials on the tour of fields conducted by the Wheat Quality Council.
Across the U.S., the largest exporter, the winter-wheat harvest may fall 3 percent to 1.441 billion bushels this year, as dry weather persists, Memphis, Tennessee-based Informa Economics Inc. said in a report on May 6. Farmers may abandon 9 million acres (3.64 million hectares) of winter wheat this year, the most since 2007, it said. Winter-wheat accounted for about two-thirds of the total U.S. wheat output last year.
Excessive Rains
About 45 percent of crop in Kansas was in very poor or poor condition as of May 1, the most since 1996, according to the U.S. Department of Agriculture.
Corn for July delivery gained 1 percent to $6.93 a bushel, rebounding from last week’s 9.3 percent slump.
Corn sowing in the U.S., the world’s largest grower and exporter of the grain, has been delayed after excessive rains left some Midwest fields too wet for heavy farm machinery.
About 13 percent of the corn crop was planted as of May 1, the USDA said in a report a day later. That’s the slowest pace since 1995, when only 10 percent of the crop was planted that week, according to USDA data tracked by Bloomberg. The average for that time of the year was 40 percent between 2006 and 2010, the USDA said.
The USDA will release its next update on the planting progress at 4 p.m. in Washington D.C. today.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
