March 31, 2008

 

US wheat futures to tumble on increased acreage

 

 

The US wheat may fall as farmers plan to increase seeding this year on higher prices caused by lower global stock and strong demand.

 

The USDA reported that about 63.8 million acres will be seeded with wheat in the market year ending May 31, up 5.5 percent from the previous year.

 

Acres seeded with spring varieties will increase 7.8 percent to 14.3 million and durum acres will rise 22 percent to 2.63 million, the USDA said.

 

Greg Grow, director of agribusiness for Archer Financial Services in Chicago, said the acreage number is higher than expected and wheat prices will start 15 to 20 cents lower this morning.

 

Grow says the market has to wait and see what is harvested as dry weather threatens some crops in the southern Great Plains and too much moisture may have damaged plants in the southern Midwest.

 

Wheat futures for May fell 14.75 cents, or 1.5 percent, to US$9.7425 a bushel overnight on the Chicago Board of Trade.

 

In the past year, the price has more than doubled and reached a record $13.495 a bushel on February 27 after adverse weather hurt global production and demand jumped on speculation growers would not produce enough to meet needs.

 

Drought has affected crops in Australia and Canada last year, and a freeze, followed by excessive rain, damaged plants in the US, the largest exporter of wheat.

 

Analysts surveyed by Bloomberg expected a forecast for 14.1 million acres for spring wheat and 2.4 million acres for durum.

 

Wheat was the fourth-biggest US crop in 2007, valued at US$13.7 billion, behind corn, soy and hay.