April 5, 2012

Wheat down as rains in US, Russia boost crop futures

As rains in parts of the US, Russia and Ukraine augment crop prospects and investor appetite diminished after minutes of a meeting showed the US Federal Reserve may hold off more monetary stimulus, wheat went down.

Wheat for May delivery fell as much as 0.6% to US$6.54 a bushel on the Chicago Board of Trade, before trading at US$6.545 at 12:16 p.m. Singapore time.

Showers in the central and southern plains in the US and the winter-wheat areas in Russia and Ukraine will help maintain soil moisture, aiding crop development, Telvent DTN Inc. said in a report. Minutes of the March 13 Fed policy meeting showed it was holding off on increasing monetary accommodation unless the US economic expansion falters or prices rise at a rate slower than its 2% target.

"US weather conditions are favourable for the wheat crop," Adam Davis, a commodity trader at Merricks Capital Services Pty., said in an e-mail today. "Risk-off sentiment is also affecting all commodities." The US is the largest wheat exporter, followed by Australia and Russia, according to USDA data released March 9.

Corn prices gained a fourth day, the longest winning streak in more than a month, as supply from the last US harvest declined and cold weather threatened planting in the world's largest grower and exporter.

May-delivery corn rose as much as 0.8% to US$6.6375 a bushel, before trading at US$6.60. Soy for May-delivery was unchanged at US$14.1675 a bushel.

Inventories (UGRSCNTO) of corn in the US on March 1 dropped from a year earlier to 6.009 billion bushels, the lowest for the date since 2004, the USDA said March 30. The southern part of the Midwest, the largest US growing region, may have cold weather next week, the Telvent DTN report said.

"Cold weather may slow early planting progress," Merricks Capital's Davis said. "This would be a concern."