Wheat drops as European harvest may help offset U.S. drought

Aug. 1 (Bloomberg) -- Wheat fell in Paris and Chicago on speculation that global supplies of the grain will be enough to offset a plunge in the U.S. corn harvest as Midwest crops suffer from the worst drought in a half century. Corn also declined.

The European Union, the world’s largest wheat grower, may produce 126.5 million metric tons of soft wheat, 400,000 tons more than forecast a month ago, the European Commission said yesterday. France, the bloc’s biggest producer, may harvest 36.7 million tons, 7.9 percent more than last year, the French Agriculture Ministry said. Paris milling wheat surged 15 percent last month as U.S. drought threatened global grain supplies.

“The harvest is in place in France and progressing in the main regions like Champagne,” Arnaud Saulais, a broker at Starsupply Commodity Brokers, said by phone from Nyon, Switzerland. “Milling wheat harvest yields are good and quality is not so bad.”

Wheat for September delivery fell 2.1 percent to $8.70 a bushel on the Chicago Board of Trade by 11:23 a.m. London time, after a 17 percent rally in July. In Paris, November-delivery milling wheat declined 1.2 percent to 257.50 euros ($317.28) a metric ton on NYSE Liffe in Paris.

The world may produce 665 million tons of wheat in the 2012-13 season, the London-based International Grains council said July 26. While the IGC estimate was unchanged from its previous forecast on July 2, output may still be 4.5 smaller than the previous year as dry weather has reduced prospects for Russia’s crop. Both wheat and corn are used in livestock feed.

Corn Tumbles

Corn for December delivery fell 1.4 percent to $7.9425 a bushel in Chicago, after earlier gaining as much as 1.4 percent. Futures surged 27 percent in July, the biggest monthly gain since 1988. Soybeans for November delivery dropped 0.8 percent to $16.285 a bushel, erasing an earlier gain of 1.2 percent. The oilseed jumped 15 percent in July.

The upper U.S. Midwest and northern Great Plains may see “numerous showers” on Aug. 3, while parts of the Great Lakes region and Ohio River Valley may have some thunderstorms during the weekend, AccuWeather Inc. said today. At the end of June, moderate to extreme drought covered the largest area of the contiguous U.S. since 1956, according to the National Climatic Data Center.

Only 24 percent of U.S. corn and 29 percent of soybeans were in good-to-excellent condition as of July 29, the lowest ratings since 1988, according to the U.S. Department of Agriculture. About 55 percent of the crop was setting pods, a stage critical for determining yields, USDA data show.

Bloomberg News

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