World food costs tracked by the Rome-based FAO dropped for a fifth month in February and the 55-item index is 12% below a record reached in February 2011. Glauber of the USDA said last month that crop prices including soybeans and corn should ease in 2013 as farmers expand supply. Both reached records last year.
Hedge funds and other large speculators have been betting on lower prices since December. They were net-short 41,519 futures and options in the week to March 12, from a net-long 80,827 contracts in August, U.S. Commodity Futures Trading Commission data show.
Russia will produce 53 million tons of wheat this season, 39% more than last year, as output in Ukraine jumps 23% to 19.5 million tons and Kazakhstan’s crop surges 48% to 15.2 million tons, the FAO estimates. Toepfer, the trader part-owned by Archer-Daniels-Midland Co., expects the global crop to gain 4.3% to 682 million tons.
In Australia, last season’s second-largest exporter, production may rise 13% in the year from July 1, the government forecaster said. Shipments probably will advance 13% to 18 million tons in 2013-2014, according to CBH Group, the country’s biggest grain handler. Canada’s Farm Ministry is forecasting a 4.8% gain in output to 28.5 million tons. The country was the fourth-largest shipper.
“We are expecting a rebound in wheat production in 2013, mainly on expectations of a return to average yields,” said Konuma. “We would expect a more comfortable supply and demand situation at the global level.”