Wheat Falls as Rising Price May Curb Demand for U.S. Stockpiles

Wheat fell for a fourth straight session on speculation that a three-week rally in prices this month will curb demand, offsetting bets that a weaker dollar will boost the appeal of U.S. grain.

The most-active contract has gained 17 percent this month, partly on speculation a weaker dollar will boost imports. Egypt, the world’s biggest importer of the grain, on Nov. 19 bought 175,000 metric tons of German, Russian and French wheat for as much as $198.75 a ton. U.S. wheat sold for $215.78 a ton ($5.8725 a bushel) on a cash basis at ports near New Orleans on Nov. 20, Department of Agriculture data show.

“Our price is about $30 a ton above Russia and $20 above France,” said Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas. “This recent rally in the wheat market -- we’re not competitive. The price has to come down to attract business.”

Wheat futures for March delivery fell 2.25 cents, or 0.4 percent, to $5.785 a bushel on the Chicago Board of Trade, after earlier rising as much as 3.4 percent. Futures have dropped 3 percent in the past four sessions, partly because of slack demand for U.S. stockpiles.

From June 1 through Nov. 12, overseas buyers agreed to purchase 14.3 million tons from U.S. inventories, down 29 percent from the same period a year earlier, government data show. Officials inspected 15.5 million bushels for export in the week ended Nov. 19, down 31 percent from the same seven-day period in 2008, the USDA said today.

“We’re so far behind on exports,” Glenn said. “Demand out of the U.S. has been weak. World demand has been steady, but it’s out of other places. We may have higher-quality wheat, but that’s not the predominant factor. In some cases, wheat’s wheat.”

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, government data show. The U.S. is the world’s largest exporter of wheat.

By Tony C. Dreibus
Bloomberg