The global wheat inventories will be smaller than forecast a month ago because of lower US production, the Department of Agriculture (USDA) said. Grain futures in Chicago surged 9.1 per cent.
The stockpiles will total 174.66 million tonnes on May 31, down 1.8 per cent from 177.79 million tonnes estimated last month, the USDA said on Friday in a report. The average estimate of 13 analysts in a Bloomberg News survey was 177.43 million tonnes. Unsold US supplies may fall 5.4 per cent to 853 million bushels (23.22 million tonnes), from 902 million bushels estimated in September, the agency said.
US production was projected at 2.224 billion bushels, down 1.8 per cent from the September estimate and up 0.3 per cent from last year. The USDA also lowered its inventory estimates for the European Union and Canada.
“All commodities are going to be fighting for acreage in the coming season,” said Parker McMahan, a senior account executive at Price Futures Group in Chicago. “Profits to the farmer will be paramount.”
Wheat surges
Wheat futures for December delivery surged 60 cents, the exchange limit, or 9.1 per cent, to settle at $7.1925 a bushel at 1 pm on the Chicago Board of Trade. The most-active contract has jumped 50 per cent since the end of June, after drought ruined fields in Russia, and floods harmed crops in Canada.
Corn and soybean futures also jumped the limits set by the CBOT. The USDA cut its corn-crop estimate for the second time in as many months, predicting a 3.4 per cent decline from last year. US farmers may collect 2.2 per cent fewer soybeans than estimated a month ago.
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“Corn is in the driver’s seat now, and your beans and your wheat are all going to follow,” said Jason Britt, an analyst at brokerage Central States Commodities Inc. in Kansas City, Missouri. “I’d hate to say we’re starting an acreage battle on October 8, but you can make an argument for that.”
Global livestock-feed use will rise to 121.05 million tonnes, up 1.9 per cent from last month’s forecast. In the US, feed- wheat use may climb to 4.9 million tonnes, or 5.8 per cent more than estimated last month.
World wheat production may total 641.44 million tonnes, down from 643.01 million tonnes forecast in September, the USDA said.
Russian output
Wheat production in Russia, once the world’s third-largest exporter, may total 42.5 million tonnes, the USDA said. That’s unchanged last month’s forecast and 31 per cent lower than the 61.7 million produced last year.
Russia halted grain exports in August after the worst drought in 50 years curbed output. Production forecasts by the USDA for Ukraine and Kazakhstan also were unchanged from last month.
“The decline in the world production has already been well documented by the trade and by the government,” said Chad Henderson, a market analyst with Prime Agricultural Consultants Inc. in Brookfield, Wisconsin.
The US is the world’s largest wheat exporter and ranks third in production, behind China and India.
Wheat is the fourth-biggest US crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.