Wheat Falls as Rising Global Supplies May Overwhelm Demand

Wheat futures fell in the last minute of trading in Chicago, erasing earlier gains, as rising global inventories are expected to overwhelm demand for the grain.

World stockpiles may climb 19 percent to 195.6 million metric tons by the end of the marketing year on May 31, the U.S. Department of Agriculture said earlier this month. Consumption is expected to rise 0.7 percent to 644.5 million tons, according to the USDA.

“We know there’s lots of supply,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. “Supplies may drop next year, but I don’t think by a whole bunch.”

Wheat futures for December delivery fell 0.25 cent to $4.9825 a bushel on the Chicago Board of Trade. The most-active contract has dropped 8 percent this month, partly on increased global inventories and slack demand for supplies from the U.S., the world’s biggest shipper of the grain.

The price earlier rose as much as 1.1 percent on signs of improving demand for U.S. wheat. About 16.9 million bushels were inspected by the government for export in the week ended Jan. 21, up 75 percent from the prior seven days, the USDA said today in a report. Exporters sold 825,800 tons of the grain in the week ended Jan. 14, more than four times the prior week, government data show.

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

By Tony C. Dreibus
Bloomberg.