(Updates prices in sixth paragraph.)
Sept. 17 (Bloomberg) -- Crop prices are set to extend a slump as surging global wheat harvests add to record supplies of corn and oilseeds, said an Australian government forecaster.
The price at U.S. Gulf ports of hard-red winter wheat, the most exported variety, may average $305 a metric ton in the year started July 1 from $315 forecast in June and $348 a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report. World output will gain 6.4 percent to 695 million tons, it said.
Wheat traded in Chicago lost 17 percent this year as global production is set to expand to a record. World food costs fell for a fourth month in August to the lowest level in more than a year on lower grain prices, according to the United Nations. Soybeans lost 3.7 percent in 2013 while corn slumped 34 percent as record U.S. output pushes global inventories to a 12-year high, the Department of Agriculture predicts.
“Wheat production is forecast to increase in most of the major growing regions in the northern hemisphere,” particularly the Black Sea area and Europe, said Abares. The extent of the decline may be less than other types of wheat, reflecting a smaller increase in world output of higher protein varieties, including U.S. hard-red winter, it said.
Australia lowered its harvest estimate last week after dry weather in the biggest producing states curbed yields. Output is set to reach 24.5 million tons, 3.5 percent less than a June estimate and compared with 22.1 million tons a year earlier, Canberra-based Abares said Sept. 10.
Wheat for December delivery rose 0.9 percent to $6.4675 a bushel on the Chicago Board of Trade at 4:42 p.m. in Singapore. Corn for delivery in December gained 1.6 percent to $4.6375 a bushel and soybeans for November advanced 0.7 percent to $13.5725 a bushel.
Farmers worldwide will collect 708.9 million tons in 2013- 2014, the most ever, according to the U.S. Department of Agriculture. A 16 percent increase in Canada and gains of 43 percent in Russia and 40 percent in Ukraine will counter a 6.8 percent drop in the U.S., the USDA predicts. About 15 percent of China’s wheat production, or as much as 20 million tons, is expected to be downgraded to feed use because of frost damage during winter and excessive rain during harvest, said Abares.
The rebound in global output follows last year’s dry weather that hurt harvests from Australia to Russia, pushing prices to a four-year high of $9.4725 a bushel in July 2012. Prices fell to $6.355 on Aug. 14, the lowest since June 2012.
World corn production will increase 11 percent to a record 957 million tons as U.S. farmers harvest an all-time high of 350 million tons, Abares said. The Gulf price for U.S. corn will average $235 a ton in the year started July 1 from $312 a year earlier, according to the bureau.
Soybean prices at Gulf ports will drop 15 percent to $510 a ton in 2013-2014 as global output of the oilseed and canola climb to records, said Abares.
World food costs tracked by the Rome-based Food & Agriculture Organization dropped 1.9 percent last month and are 15 percent below the record set in February 2011. The agency’s cereals index has tumbled 16 percent this year.
Hard-red winter wheat, used to make bread, is the largest variety of wheat produced and exported by the U.S., the world’s biggest shipper, according to the USDA. While Australia was the third-biggest exporter in 2012-2013, it may drop to fourth in 2013-2014 as Canada boosts shipments, according to the USDA.
--Editors: Ovais Subhani, James Poole