June 2, 2011

 

CBOT wheat drops on lifting of Russian export ban

 

CBOT wheat fell to a two-week low as Russia prepared to lift an export ban next month and rains expected this week in Europe eased drought concerns, while CBOT corn and soy rose.

 

Russia, once the world's second-biggest wheat exporter, will allow shipments starting on July 1. The ban was imposed in August after drought slashed crops. This year, France, Europe's top grower, is suffering from the driest spring in 50 years, forecaster France Meteo said. Showers were expected this weekend after rain helped crops in Germany, Telvent DTN said.

 

"Russia opening the door for some exports was overhanging the market, but then we had the news about good rain in Europe," said Don Roose, the president of US Commodities Inc. in West Des Moines, Iowa. "The change in the forecast to wetter paces the market, along with the Russian selling potential."

 

CBOT wheat for July delivery fell 23 cents, or 2.9%, to settle at US$7.5925 a bushel, bringing the two-day slide to 7.4%. Earlier, the price touched US$7.5425, the lowest for a most-active contract since May 17.

 

Futures have jumped 68% in the past year after Russia cut exports and adverse weather limited output from the US Great Plains to Australia.

 

Corn futures for July delivery rose 11 cents, or 1.5%, to US$7.585 a bushel. The commodity has more than doubled in the past year on rising demand from makers of ethanol and livestock feed, while wet weather slowed US planting.

 

About 86 % of the crop was planted as of May 29, behind the five-year average of 95%, the government said yesterday. 63% of crops were in good or excellent condition, below the year-earlier rating of 76%. Farmers in the eastern Midwest, where rains were the most excessive, may take insurance instead of planting, Roose said.

 

"We've got concerns about both acreage and yield," he said. "We still have almost 13 million acres of corn to plant, and we're zeroing in on those prevented-planting dates in Indiana and Ohio."

 

Soy futures for July delivery climbed 10.25 cents, or 0.7%, to US$13.8625 a bushel. The price has gained 49% in the past year.

 

US planting was 51% complete as of May 29, behind the five-year average of 71%, the Department of Agriculture said.

 

Corn is the biggest US crop, valued at US$66.7 billion in 2010, followed by soy at US$38.9 billion, government figures showed. Wheat was fourth at US$13 billion.