Wheat Falls as Supply Outlook Outweighs Eastern Europe Turmoil

Jul 18, 2014 3:59 pm ET

July 18 (Bloomberg) -- Wheat fell for the first time in a week as prospects for increasing global supplies outweighed concerns that turmoil in Eastern Europe will disrupt shipments from the Black Sea. Corn extended a slump to a four-year low.

The U.S. Department of Agriculture forecast that world wheat inventories next year will rise 2.8 percent to the highest since 2012. Yesterday, futures surged the most in three months after Ukraine said rebels shot down a Malaysian jet near its border with Russia, escalating the Eastern European conflict.

“We’re moving from an era of shortage to an era of plenty,” Malinda Goldsmith, a partner at Dallas-based Four Seasons Commodities Corp., said in a telephone interview. “There’s no reason for Russia to close Black Sea ports. It’s in no one’s best interest to stop global trade of grains.”

Wheat futures for September delivery fell 3.4 percent to close at $5.3225 a bushel on the Chicago Board of Trade. The price gained 4.7 percent in the previous four days, including a 2.4 percent jump yesterday.

Russia is the world’s fifth-biggest shipper, and Ukraine is ninth, International Grains Council and Eurostat data show. The countries will account for 17 percent of world exports this year, according to a USDA estimate on July 11.

Wheat entered a bear market on June 11. On July 14, the price touched $5.2425, the lowest for a most-active contract since July 7, 2010. The U.S. is the top exporter.

Corn futures for December delivery fell 2.3 percent to $3.785 a bushel. The grain touched $3.775, the lowest for a most-active contract since July 28, 2010. The price has slumped 24 percent in the past 12 months, partly on the outlook for a bumper U.S. crop this year.

Soybean futures for November delivery dropped 0.8 percent to $10.8525 a bushel. This week, the price gained 1 percent after U.S. exporters reported spot sales of 1.768 million metric tons, including 1.064 million to China, the biggest buyer.

Brazil is the top shipper, followed by the U.S.

--With assistance from Megan Durisin in Chicago.