Declining output lifts wheat prices

CHICAGO, June 12 (Bloomberg): Wheat rebounded in Chicago today, after falling Wednesday into a bear market, as traders weighed prospects for declining US output against rising world supply.
US wheat output may be 1.942 billion bushels, down from 1.963 billion estimated last month and 8.8 per cent less than the prior year, the US Department of Agriculture said Wednesday. The harvest is expected to decline this year amid drought in the Great Plains, the main US growing area. The USDA still raised its forecast for global inventories at the end of the 2014-15 season amid improved prospects for crops from Europe to China.
"The USDA shocked against our estimates by lowering US wheat production estimates," Chris Gadd, an analyst at Macquarie Group Ltd. in London, said in a report sent by e-mail today. "But improvements in production in other regions of the world clearly offset this loss."
Wheat for July delivery rose 0.6 per cent to $5.9275 a bushel at 5:29 a.m. on the Chicago Board of Trade, after dropping to $5.8775, the lowest for a most-active contract since Feb. 13. Futures settled at $5.8925 Wednesday, slumping 20 per cent from a 14-month closing high of $7.39 on May 6. That decline heralds a bear market. In Paris, milling wheat for November delivery was unchanged at 189.25 euros ($255.93) a metric ton on Euronext.