November 11, 2010

CBOT wheat decreases on improving prospects for US winter-crop

CBOT wheat has decreased continuously for two days as rain might enhance prospects for winter crops which are planted recently in the US Great Plains.

Areas from Nebraska to northern Texas may get as much as 0.3 inches (0.8 centimetres) of rain tomorrow, and storms may persist on November 12, according to AccuWeather Inc. Most areas in Kansas, the largest winter-wheat-growing state, Oklahoma, and Nebraska have obtained less than half of the normal amount of rainfall in the past one month.

"We are seeing a little better rain in the forecast in the next week and a half for the Plains," said an analyst. "Dry weather is a problem producers are concerned about, but it's not a panic situation yet," he said.

Wheat futures for December delivery decreased by US$0.1175 or 1.6%, and stabilised at US$7.10 bushel at on CBOT. Prices have increased by 48% since end June as drought in Russia and Eastern Europe affected crops.

Approximately 45% of US winter wheat was in good or perfect condition as of November 7 as compared to 46% in the previous week and 63% in the previous year. The USDA said November 8 planting was 95% completed.

Futures also decreased as a stronger dollar eroded the appeal of US supplies for holders of other currencies, and after the USDA reported yesterday that global stockpiles were in line with analysts' estimates, said an analyst.

Inventories on May 31 will total 172.51 million tonnes, 1.2% less than what was estimated last month, the USDA said.

The decline was "pretty much already built into the market," because wheat futures climbed 6.7% in the three days before the USDA report, the analyst said. "Global inventories are comfortable, and there's still a margin for error if something happens with the weather," he said.

Wheat is the fourth-biggest U.S. crop, valued at US$10.6 billion last year, behind corn, soy, and hay, according to government data.