U.S. wheat futures tumbled Thursday as increasing estimates for global production overshadowed concerns about a decline in the domestic crop.
Soft red winter wheat for September delivery, the most actively traded contract, fell 11 1/2 cents, or 1.6%, to $6.93 1/4 a bushel at the Chicago Board of Trade. Prices fell less at exchanges in Kansas City and Minneapolis.
Driving prices lower was the International Grains Council’s forecast for 2011-12 world grain production to reach a record 1.82 billion metric tons. The council increased its estimate 9 million tons from a previous outlook due to improving prospects for wheat crops in Europe, Russia, the U.S. and India.
The European Union’s forecasting agency separately raised its estimate for the bloc’s wheat crop due to beneficial rainfall. The agency, known as MARS, said soft wheat yields are expected to average 5.6 tons a hectare, up from its previous forecast of 3.5 tons/hectare and 1.1% above the five-year average.
"Global wheat production does not look as dire as it did just a few months ago, with rains helping mitigate the impact of a dry spring in key European producers," said Barclays Capital analyst Sudakshina Unnikrishnan.
The brightening global outlook eclipsed lower-than-expected estimates for U.S. output of hard red spring wheat. Surveys of hard red spring wheat fields by an annual crop tour in North Dakota this week found the crop on average lagged last year.
Yet, concerns about the expected drop in yields from last year have been tempered by increased output in Russia and Ukraine. Russia resumed grain exports this month after banning them for nearly a year due to a devastating drought.
"Because of the Ukraine and Russia increasing supplies, the spring wheat numbers are dwarfed," said Mike Zuzolo, analyst for Global Commodity Analytics & Consulting, a brokerage in Indiana.
Still, hard red spring wheat futures, traded at MGEX in Minneapolis, suffered smaller losses than CBOT contracts because of concerns about the crop. Hard red spring wheat for September delivery lost 4 1/4 cents, or 0.5%, to $8.46 3/4 a bushel. Meanwhile, hard red winter wheat for September delivery stumbled 4 3/4 cents, or 0.6%, to $7.83 1/2 a bushel at the Kansas City Board of Trade.
In other markets at the CBOT, corn for December delivery dropped 5 1/4 cents, or 0.8%, to $6.86 1/4 a bushel. Soybeans for November delivery lost 9 cents, or 0.7%, to $13.71 1/2 a bushel.
Ethanol for December delivery dropped 0.5% to $2.553 per gallon, while oats for September delivery end down 1.3% at $3.50 3/4 a bushel. December soymeal ended flat at $363.60 per short ton, and December soyoil slipped 1.3% to 56.55 cents per pound. September rice sank 2.4% to $16.39 per hundredweight.
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