Wheat Falls as Favorable Weather Boosts U.S. Crop Prospects

Wheat fell for the third time in four sessions after favorable weather boosted crop prospects in the U.S., the world’s largest shipper of the grain.

About 69 percent of the winter crop was rated good or excellent as of April 25, up from 45 percent a year earlier, the U.S. Department of Agriculture said this week in a report. About 71 percent of the wheat in Kansas, the biggest producer of winter varieties, got the top ratings.

“I’m not sure it could look any better,” said Jerod Leman, a broker at Wellington Commodities in Carmel, Indiana, describing the winter-wheat crop, which has benefited from a mix of ample rain and sunshine during the past month.

Wheat futures for July delivery fell 2.5 cents, or 0.5 percent, to $4.88 a bushel on the Chicago Board of Trade. The price earlier rose as much as 1.2 percent. The most-active contract is down 9.9 percent this year because of reduced demand for U.S. grain and rising global stockpiles.

Wheat also declined after Spain had its credit rating cut, adding to fears that a debt crisis will spread through Europe and reduce demand for raw materials, including those used to make food and livestock feed.

Spain’s rating was cut one step by Standard & Poor’s to AA. Yesterday, the company lowered its rating on Greece’s sovereign debt to junk.
“You get the idea that maybe the European issues are hitting the” wheat markets, said Mike Zuzolo, the president of Global Commodity Analytics in Lafayette, Indiana.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

Tony C. Dreibus
Source: Bloomberg