Wheat Caps Longest Decline This Year on Ample Global Supplies

May 13, 2014 3:27 pm ET

May 13 (Bloomberg) -- Wheat dropped for a fifth straight session, the longest slump since December, on speculation that increasing global supply will reduce demand for grain in the U.S., the largest exporter. Corn and soybeans rose.

World inventories will total 187.4 million metric tons by the end of the 2014-15 season, up 0.5 percent from the prior year, the U.S. Department of Agriculture said May 9. World trade is forecast to fall 6.3 percent to 151.8 million, the agency said. U.S. cash wheat prices rose 20 percent since December, compared with a 4.4 percent drop for French wheat.

“World supplies are comfortable and buyers are not going to run out and start buying U.S. wheat,” Shawn McCambridge, the senior grain analyst for Jefferies Bache LLC in Chicago, said in a telephone interview. “Anything that is not exported will increase domestic U.S. supplies.”

Wheat for July delivery dropped 0.8 percent to close at $7.0925 a bushel at 1:15 p.m. on the Chicago Board of Trade, capping the longest string of declines since Dec. 19. The grain gained 17 percent this year as drought and freezing temperatures cut U.S. winter-wheat yields.

Prices also fell in Chicago as hedge funds cut bullish bets, McCambridge said. Speculators were net long 45,265 futures and options contracts as of May 6, the most since November 2012, Commodity Futures Trading Commission data show.

Corn futures for July delivery rose 0.7 percent to $5.0275 a bushel after touching $4.975, the lowest since May 5.

Fifty-nine percent of U.S. corn sowing was completed as of May 11, up from 29 percent a week earlier, the USDA said yesterday. An estimated 18 percent of plants had emerged from the ground, behind the prior five-year average of 25 percent.

Soybean futures for delivery in July advanced 1.3 percent to $14.8375 a bushel. U.S. farmers finished 20 percent of soybean planting, near the five-year average of 21 percent.

Eastern areas of the Midwest had rain today, and crop planting and seed emergence in western regions may be threatened by “below to well below normal” temperatures later this week, forecaster DTN said. The number of viable plants can be reduced the longer seeds remain in the ground.

--With assistance from Phoebe Sedgman in Melbourne and Whitney McFerron in London.