Wheat Has Biggest Weekly Drop in 13 Months on World Crop Gains

Wheat fell, marking the biggest weekly loss in 13 months, on concern that increased global production will boost inventories and curb demand for exports from the U.S., the world’s biggest shipper.

World stockpiles will rise 19 percent to 195.6 million metric tons, the most since 2002, the U.S. Department of Agriculture said Jan. 12. Production may total 676.1 million tons, second-most only to last year’s record of 682.7 million tons, the USDA said.

“The crop estimates this week set the tone,” said Larry Young, a senior trader at Infinity Futures Inc. in Chicago. “We triggered a sell signal, so technically traders are wanting to get short.”

Wheat futures for March delivery fell 17.75 cents, or 3.4 percent, to $5.10 a bushel on the Chicago Board of Trade. The price fell more than 10 percent this week, the most since Dec. 5, 2008.

The most-active contract fell below $5.2525 and then dropped past $5.19, triggering automatic sell orders, Young said.

U.S. stockpiles of wheat on Dec. 1 totaled 1.765 billion bushels (48 million metric tons), up 24 percent from the same date a year earlier, the UDSA said in a report on Jan. 12. Exports are forecast to reach 825 million bushels by May 31, the smallest amount since 1972, the USDA said on Jan. 12.

Goldman Sachs Group Inc. yesterday cut its 12-month forecast for commodity returns following a jump in prices. The S&P GSCI Enhanced Total Return Index of 24 commodities will gain 12.5 percent in the next year, Goldman said. The bank in a Dec. 3 note had forecast a 12-month gain of 17.5 percent.

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

Bloomberg