May 15, 2012

US wheat futures fall on greater yield

After the US estimated a larger local output as favourable weather in the southern Great Plains and Midwest boosts yields, wheat futures dropped, making a second consecutive weekly drop.

The winter-wheat crop in the US, the world's biggest exporter, will jump 13% to 1.694 billion bushels this season, the USDA said in a report. Analysts surveyed by Bloomberg estimated a harvest of 1.658 billion bushels. Warm weather and timely rain has improved field conditions and sped development in Kansas, the top US grower of winter varieties.

"The report was negative with the higher-than-expected production numbers," Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said in a telephone interview.

Wheat futures for July delivery slipped 0.7% to settle at US$5.97 a bushel at 1:15 p.m. on the Chicago Board of Trade. The price fell 2.1% this week and has slumped 8.5% this year.

The price also declined on speculation that global consumption of the grain will decline after India said its industrial production unexpectedly contracted in March on weaker demand and China's output grew the least since 2009 in April, Leffler said.

Wheat is the fourth-largest US crop, valued at US$14.4 billion in 2011, behind corn, soybeans and hay, government data show.