July 15, 2011

US wheat exports may shrink on Russia, Ukraine supplies



Wheat fell for the first time in three days on speculation that demand for shipments from the US, the world's leading exporter, will shrink as supplies increase from Russia and Eastern Europe.


Russia, which lifted a ban on exports July 1, may harvest 90 million tonnes of grain this year, more than projected by the government last month, First Deputy Prime Minister Viktor Zubkov said. Ukraine's wheat output may total 19.3 million tonnes, topping US government estimates, APK-Inform, a research company, said.


The US has "intense competition from Russia and Ukraine," Louise Gartner, the owner of Spectrum Commodities in Beavercreek, Ohio, said. "Domestic demand is absorbing available supplies, but if export sales start to struggle, there are going to be some pretty serious headwinds for wheat."


Wheat futures for September delivery fell US$0.075, or 1%, to settle at US$7.07 a bushel on the Chicago Board of Trade (CBOT). The price jumped 12% in the previous two days after a government report projected lower US inventories.


Russia, once the world's second-biggest exporter, may ship 1.5 million tonnes of grain this month, Zubkov said. Last year, exports were four million tonnes before a ban was imposed because of the most severe drought in 50 years.


In Ukraine, milling wheat probably will make up 30% of all output, Anastasia Ivasenko, an analyst at APK-Inform, said at a forum in Kiev, the nation's capital.


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

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