Wheat Declines as Report Shows Low Export Demand for U.S. Grain

Wheat fell as government reports showed demand remains low for exports while inventories are rising in the U.S., the world’s biggest shipper of the grain.

Exporters sold about 181,900 metric tons in the week through Jan. 7, the second-lowest amount in the year that began June 1, the U.S. Department of Agriculture said today. The smallest sales total since May occurred in the previous week, the data show. Stockpiles on Dec. 1 rose 24 percent from a year earlier to 1.765 billion bushels, the USDA said on Jan. 12.

“Over time, all these grains are going lower,” said Tomm Pfitzenmaier, a Summit Commodity Brokerage partner in Des Moines, Iowa. Demand for U.S. wheat will decline unless “the dollar plummets, and I don’t see that happening. Those were pretty bearish numbers on Tuesday. And I’m not totally convinced that we’re at the end of the bad news.”

Wheat futures for March delivery fell 9.25 cents, or 1.7 percent, to $5.2775 a bushel on the Chicago Board of Trade. The most-active contract dropped 8.1 percent in the past year as demand slowed for U.S. supplies and world output rose.

U.S. export sales since June 1 are 74 percent of the government’s forecast for the year through May, less than the 83 percent average at the same point in the previous five years, USDA data show. The combined amount of wheat sold and shipped as of Jan. 7 is down 24 percent from a year earlier, at about 16.7 million tons.

38-Year Low

Exports are forecast to reach 825 million bushels (22.5 million tons) by May 31, the smallest amount since 1972, the USDA said on Jan. 12.

World inventories, before Northern Hemisphere harvesting begins in June, are forecast to rise 19 percent to 195.6 million tons, the most since 2002, the USDA said on Jan. 12.

“Supply and demand fundamentals continue to work against wheat finding a bottom,” said Mike Zuzolo, the president of Global Commodity Analytics & Consulting LLC in Lafayette, Indiana. Wheat prices may fall to $4.90 before spurring demand from millers and traders, Zuzolo said.

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, data show.

Bloomberg