BLBG: Wheat Futures Decline as Investors Lock in Gains From Drought
Wheat futures dropped, paring the biggest weekly gain since November, as investors locked in gains after prices surged 24 percent this month through yesterday.
September-delivery wheat dropped 0.7 percent to $5.92 a bushel on the Chicago Board of Trade at 3:27 p.m. Singapore time, trimming this week’s advance to 10 percent, the biggest since the week ended Nov. 13.
Futures yesterday jumped 6.7 percent to $5.9625 a bushel, the biggest gain for the most-active contract in 19 months, on concern that a prolonged dry spell will widen crop damage in Russia, the third-largest grower in the 2009-2010 season, according to the U.S. Department of Agriculture.
“We’re seeing a little bit of profit-taking,” Peter McGuire, managing director at CWA Global Markets Pty. in Sydney, said by phone today. “It’s just had such a massive spike to the upside since the end of June.”
Still, the rally may resume next week, as adverse weather in some of the world’s biggest growers persists, adding to concerns global output may be smaller than estimated, he said.
Wheat quality in France may have been diminished by rain at the end of the growing period, reducing the volume of flour that can be produced from the grain, French farm advisers Agritel and Offre et Demande Agricole said. Germany’s wheat output may shrink to 23.8 million metric tons, from 25.2 million tons last year, Deutscher Raiffeisenverband e.V. said July 14.
The two countries are the biggest producers in the European Union, according to the USDA.
“Reports of further downgrades to EU crops last night sparked frenzied buying,” Commonwealth Bank of Australia said in a report e-mailed today.
‘Persisting Dryness’
Western and southern areas of Russia and western areas of Kazakhstan will have “mostly dry weather” in the seven days following July 15, Telvent DTN Inc. said in a forecast yesterday.
“Persisting dryness in Russia and Kazakhstan is causing further yield loss,” Commonwealth Bank said.
Russia’s harvest of all grains will fall by at least a fifth to about 77 million tons this year from a year earlier, according to the nation’s Grain Producers’ Union forecast released yesterday.
The nation’s wheat crop harvested from next month may be 51 million tons, down from 61.7 million tons, because of drought, Rabobank analyst Luke Chandler said July 14.
Hungary’s wheat harvest may be between 3.5 million and 4 million tons this year, state news agency MTI reported July 14, citing Gyorgy Czervan, state secretary at the farm ministry. That compares with 4.4 million tons harvested last year, according to the statistics office data.
The USDA’s July 9 global wheat output estimate of 661 million tons assumes that Russia’s harvest will be 2 million tons more than the Rabobank forecast, Germany’s output will be 1.7 percent bigger than the Deutscher Raiffeisenverband e.V. outlook, and Hungary’s production will be at least 800,000 tons more than the Agriculture Ministry forecast.
November-delivery corn fell 0.2 percent to $4.045 a bushel in Chicago, trimming the weekly gain to 2.3 percent. Soybeans for November delivery were little changed at $9.8825 a bushel, set for a 3.7 percent gain this week.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net.
