Wheat prices fall on expected growing US grain inventories

Wheat prices fell on renewed speculation that rising global production and slowing economy will boost inventories of the crop in the US.

Stockpiles is seen to double to 712 million bushels in the 12 months ending May 31, up from a February forecast of 655 million bushels, the USDA said.

Wheat futures have plunged 54 percent in the past year.

Wheat futures for May delivery dropped 22.5 cents or 4.1 percent to US$5.30 per bushel on the CBOT, the biggest decline since March 11. The price jumped 6.6 percent in the past few days as a drought in the Great Plains lowered prospects for the US winter crop.

Global supplies may increase 30 percent to 155.9 million tonnes by May 31, up from February's forecast of 150 million tonnes, the USDA said.

Australian production may rise to 21.5 million tonnes from the February estimate of 20.15 million tonnes.

US wheat imports may also increase to 120 million bushels, up from 110 million bushels projected last month, the USDA said. Most of the imports will come from Canada, where there will be a large crop but a shrinking world market.

Demand for US wheat is weakening as consumers have less money to spend on food, and livestock producers will use less of the grain to feed animals. Exports are expected to fall 22 percent in the marketing year that started on June 1, according to the USDA.