Wheat Falls to Three-Month Low on Slack Demand for U.S. Grain

Wheat prices fell to a three-month low on signs of slack demand for grain from the U.S., the world’s biggest shipper, and rising global inventories.

About 9.4 million metric tons were inspected for export in the week ended Jan. 14, down 24 percent from the previous week and the lowest in a year, U.S. Department of Agriculture data showed yesterday. The agency has forecast that global stockpiles will jump 19 percent in the year ending May 31.

“The demand structure is weak, and exports are weak with no signs in the near future of picking up,” said William Bayer, a partner at PTI Securities in Chicago. “Wheat, in the grain complex, is the leader down. What is troubling is open interest seems to be picking up as we continue lower, and that’s a sign of fresh selling.”

Wheat futures for March delivery fell 3 cents, or 0.6 percent, to $4.975 a bushel on the Chicago Board of Trade. Earlier, the price touched $4.8525, the lowest level for a most-active contract since Oct. 12. The grain is down 8.1 percent this month.

Futures also dropped as the dollar’s advance eroded the appeal of U.S. exports. The greenback headed for the biggest gain in six weeks against a basket of six major currencies.

“If the dollar does continue to strengthen, you’re going to see some continued selling in the commodities,” Bayer said. “You’ve got all the commodities on the defensive.”

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