US wheat futures slump on stockpile gains

Wheat futures fell for the second time in three days after the US government predicted global stockpiles will rise to the biggest amount in eight years.

World inventories may total 198.1 million tonnes in the marketing year that ends on May 31, 2011, the USDA said. That is up 2.4% from 193.4 million tonnes a year earlier, government data show. Wheat has dropped 9.2% this year due to rising global stockpiles and favourable weather in growing areas.

Wheat futures for July delivery slipped 1.75 cents, or 0.4%, to US$4.915 a bushel on the CBOT. Earlier, the price rose as much as 3.1% on speculation that investors who had shorted the market, or bet prices would fall, bought back contracts and liquidated positions.

Wheat is the fourth-biggest US crop, valued at US$10.6 billion in 2009, behind corn, soy and hay, government data show.

Meanwhile, unsold supplies of US wheat as of May 31, 2011, will be 4.9% higher than a year earlier, according to the USDA. Surplus at the end of the next marketing year will total 997 million bushels, up from 950 million bushels, as higher beginning stocks more than offset a smaller crop, the USDA said.

Total wheat production is projected at 2.043 million bushels for the crop year starting June 1, 2010, down 7.8% from 2.216 million in the current year, the USDA reported. Yields will fall to 43.4 bushels per acre from 44.4 bushels.