BLBG: Wheat Declines, Paring Weekly Advance, as 24% Rally in July Spurs Selling
Wheat fell in Chicago, paring the biggest weekly climb since November, as investors locked in gains after prices surged 24 percent this month through yesterday. The grain also slid in Paris.
September-delivery wheat dropped 1.3 percent to $5.885 a bushel on the Chicago Board of Trade at 12:21 p.m. Paris time, trimming this week’s climb to 9.4 percent, the most since the week ended Nov. 13. Milling wheat for November delivery traded on NYSE Liffe in the French capital declined 1.3 percent.
Chicago wheat futures yesterday jumped 6.7 percent, 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 2009-10 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.”
The rally may resume next week as adverse weather in some of the world’s biggest growers persists, adding to concerns global output may miss estimates, McGuire 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 milled from the grain, French farm advisers Agritel and Offre et Demande Agricole said. Germany’s wheat output may drop to 23.8 million metric tons from 25.2 million tons last year, Deutscher Raiffeisenverband e.V. said July 14.
Main EU Producers
The two countries are the biggest producers in the European Union, according to data from the 27-nation bloc.
Paris-traded wheat recently fell to 174.50 euros ($226.27) a ton. Prices rose 6.2 percent yesterday, the most since the November contract started trading in March 2009, and have gained 8.4 percent this week.
“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 in Russia and Kazakhstan is causing further yield loss.”
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.
Russia’s harvest of all grains will fall by at least a fifth to about 77 million tons this year from last year, according to a forecast from the national Grain Producers’ Union yesterday. The nation’s wheat crop harvested from next month may drop to 51 million tons from 61.7 million tons because of drought, Rabobank analyst Luke Chandler said July 14.
Hungarian Crop
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.
December-delivery corn gained 0.1 percent to $4.055 a bushel in Chicago, extending the weekly gain to 2.6 percent. Soybeans for November delivery added 0.2 percent to $9.895 a bushel, set for a 3.8 percent gain this week.
