Wheat Declines on Bets Black Sea Tensions Won’t Disrupt Supplies

Aug 29, 2014 3:34 pm ET

Aug. 29 (Bloomberg) -- Wheat fell for the first time in four sessions on speculation that tensions between Russia and Ukraine won’t disrupt the global grain trade. Corn and soybeans slid as rain aids U.S. Midwest crops.

Wheat futures through yesterday rebounded 10 percent since touching a four-year low on July 29 as the conflict in the Black Sea region escalated. World production will rise to a record 713.4 million metric tons in the 2014-15 season, 1.6 percent more than estimated in July and topping the prior year’s harvest of 712.5 million tons, the London-based International Grains Council said today in an e-mailed report.

“The Russian and Ukraine tensions will hang over the market, but it won’t escalate into a major crisis,” Shawn McCambridge, the senior grain analyst for Jefferies Bache LLC in Chicago, said in a telephone interview. “Both countries have big crops and need to generate export earnings shipping wheat. Plus, the world has no shortage of available wheat.”

Wheat futures for December delivery fell 1.4 percent to close at $5.635 a bushel at 1:15 p.m. on the Chicago Board of Trade. The grain climbed 6.3 percent in August, the first monthly gain since April.

Ukraine and Russia may account for 21 percent of global wheat exports, according to U.S. Department of Agriculture estimate on Aug. 12.

Larger-than-expected crops are seen for Russia, the European Union and China, the International Grains Council said. Total stockpiles of grain including wheat and corn at the end of 2014-15 will be 426 million tons, a 15-year high, the IGC said. Inventories will rise even as demand for livestock feed pushes global consumption to a record 1.952 billion tons.

Soybean futures for November delivery fell 0.4 percent to $10.2425 a bushel in Chicago, capping a 1.7 percent drop this week. Prices declined a fourth straight month, the longest stretch since December 2012, as the USDA forecasts domestic production at a record 3.816 billion bushels.

Corn futures for delivery in December slid 1.2 percent to $3.6475 a bushel. The grain also posted a fourth monthly drop as record U.S. production is forecast to push world stockpiles up 9.8 percent to a 15-year high before the 2015 harvest begins.

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