June 7, 2010

CBOT wheat futures drop to lowest in three years      

 

Wheat futures fell in Chicago to the lowest level in more than three years on concerns Europe's debt crisis will slow global growth and curb demand for grains as the US harvest expands.

Corn and soy also declined. The July-delivery contract dropped as much as 0.6% to US$4.3325 a bushel, the lowest since April 2007, before trading at US$4.34 at 9:52 a.m. in Singapore.

Winter-wheat production in the US, the world's biggest exporter, will total 1.481 billion bushels, Informa Economics Inc. said Friday (June 4), raising its estimate from 1.466 billion bushels last month. The Dollar Index rose for a seventh session, set for the highest level since March 2009, as investors seek haven in the US currency after the Group of 20 finance chiefs said the economic rebound faces significant challenges.

The higher US winter-wheat output estimate by Informa "is reinforcing that perception that the crop is getting larger and that continues to put pressure on wheat, combined with risk aversion in the financial markets," Michael Pitts, director for commodity sales at National Australia Bank Ltd., said. "Certainly, what's happening in the financial market is impacting commodities generally."

The MSCI Asia Pacific Index lost 3.3% and was headed for the biggest decline since May 25 as commodities including oil, gold and copper fell on concern Europe's debt crisis may derail the economic recovery.

The USDA forecast on May 11 that global wheat stockpiles will expand 2.4% to 198.089 million tonnes at the end of the 2010-2011 marketing year, the highest in nine years, with the US harvest at 1.458 billion bushels in the year beginning June 1. The USDA will release its next outlook on global agricultural supply Thursday (June 10).

Hedge-fund managers and other large speculators increased their net-short positions in Chicago wheat futures in the week ended June 1, according to US Commodity Futures Trading Commission data.

Speculative short positions, or bets prices will fall, outnumbered long positions by 54,877 contracts on the CBOT, the Washington-based commission said in its Commitments of Traders report. Net-short positions rose by 2,000 contracts, or 4%, from a week earlier.

Corn for July-delivery fell as much as 0.9% to US$3.37 a bushel, the lowest since October 5. July-delivery soy lost as much as 0.7% to US$9.2825 a bushel, a two-week low.