June 28, 2011

CBOT wheat slides as accelerating harvest boosts US grain supply

CBOT wheat fell, heading for the biggest monthly slump since 2008, as warm, dry weather allowed farmers to accelerate the harvest in the US Great Plains.

About 44% of the winter crop was harvested as of yesterday, ahead of the five-year average of 37%, the USDA said today after the close of trading in Chicago. Plant quality in Ellis County, Kansas, has been "excellent," while yields were "variable," Kansas Wheat, a trade group, reported on June 25. Kansas is the biggest US winter wheat growing state.

Wheat futures for September delivery fell 10.25 cents, or 1.6 %, to settle at US$6.5075 a bushel on CBOT. The grain has dropped 17% in June, heading for the biggest monthly decline since October 2008. Prices are still up 38% in the past year.

Futures also fell on speculation that demand will increase for cheaper Russian supplies after the country removes a ban on exports July 1. Russian third-grade milling-wheat prices decreased as much as 9.1% to RUB6,000 (US$212) a tonne in the North Caucasus and Southern federal districts last week, the country's Grain Producers' Union said.

"Russia, before they banned exports last year, their objective was to gain as much market share as possible, and their way of doing it was to undercut everyone else's prices," McReynolds said. "Now, they're picking up from where they left off."

Wheat is the fourth-largest US crop, valued at US$13 billion in 2010, behind corn, soy, and hay, government data showed.