Wheat jumps most in five weeks as Canada harvest may decline
Monday, 14 June 2010
CHICAGO, June 13 (Bloomberg): Wheat rose the most in five weeks after farmers in western Canada planted the fewest acres since 1971, reducing yield prospects for the world's biggest exporter of the grain behind the US.
Spring-wheat acreage is expected to fall 9 per cent from last year and durum seeding may fall 40 per cent because of low prices and excessive rain, said Bruce Burnett, the director of weather and market analysis at the Canadian Wheat Board. Western Canada, the nation's biggest growing region, may produce 22 per cent this year at 18.9 million tonnes, Burnett said Friday.
"Reduced production could increase US exports," said Terry Reilly, a market analyst for CitiGroup Global Markets in Chicago. "The acreage losses may be higher," because rains continue to delay planting in Canada, Reilly said.
Wheat futures for July delivery jumped 7.5 cents, or 1.7 per cent, to $4.4075 a bushel on the Chicago Board of Trade, the biggest gain since May 4. The commodity gained 1.1 per cent this week, the first advance in three weeks. The most-active contract has fallen 19 per cent this year because of reduced demand for US grain and rising global stockpiles.
Futures also gained on speculation that low prices and declining inventories of corn will boost demand for wheat in feed rations for US livestock.
Corn inventories will total 1.603 billion bushels on August 31, the lowest level for that time of year since 2007, the US Department of Agriculture said Thursday. As corn stockpiles decline and prices rise, feedlot managers may turn to wheat, Reilly said.
Wheat used in livestock feed will rise to 200 million bushels in the marketing year that began June 1, up from 180 million last year, the USDA said this week.
"Wheat is cheap relative to corn," Reilly said. "Wheat- feed use may rise to 230 million bushels."
Wheat is the fourth-biggest US crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.
Spring-wheat acreage is expected to fall 9 per cent from last year and durum seeding may fall 40 per cent because of low prices and excessive rain, said Bruce Burnett, the director of weather and market analysis at the Canadian Wheat Board. Western Canada, the nation's biggest growing region, may produce 22 per cent this year at 18.9 million tonnes, Burnett said Friday.
"Reduced production could increase US exports," said Terry Reilly, a market analyst for CitiGroup Global Markets in Chicago. "The acreage losses may be higher," because rains continue to delay planting in Canada, Reilly said.
Wheat futures for July delivery jumped 7.5 cents, or 1.7 per cent, to $4.4075 a bushel on the Chicago Board of Trade, the biggest gain since May 4. The commodity gained 1.1 per cent this week, the first advance in three weeks. The most-active contract has fallen 19 per cent this year because of reduced demand for US grain and rising global stockpiles.
Futures also gained on speculation that low prices and declining inventories of corn will boost demand for wheat in feed rations for US livestock.
Corn inventories will total 1.603 billion bushels on August 31, the lowest level for that time of year since 2007, the US Department of Agriculture said Thursday. As corn stockpiles decline and prices rise, feedlot managers may turn to wheat, Reilly said.
Wheat used in livestock feed will rise to 200 million bushels in the marketing year that began June 1, up from 180 million last year, the USDA said this week.
"Wheat is cheap relative to corn," Reilly said. "Wheat- feed use may rise to 230 million bushels."
Wheat is the fourth-biggest US crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.