Wheat dropped to an 18-month low and corn and soybeans declined after the U.S. government said global supplies will be bigger than forecast last month.
Global wheat inventories before the start of the Northern Hemisphere harvests in 2014 will be 182.78 million metric tons as Canadian and Australian growers collect bigger crops than a year earlier, compared with 178.48 million predicted in November, the U.S. Department of Agriculture said today in a monthly report. Analysts surveyed by Bloomberg were expecting 179.98 million, on average.
World wheat production will be larger than forecast last month and soybean and corn crops will also be bigger, the USDA said today. Cereal costs tracked by the United Nations fell 24% in the past year, more than any food group. The global grain glut is cutting costs for food makers from Panera Bread Co. to Domino’s Pizza Inc.
“The market is down because the wheat-reserve supply continues to rise,” Dale Durchholz, the senior grain analyst for AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “We are not short of wheat anywhere in the world. There is no reason for importing nations to rush in and buy.”
Wheat futures for March delivery fell 1.8% to close at $6.3875 a bushel at 1:15 p.m. on the Chicago Board of Trade, after touching $6.35, the lowest since June 18, 2012.
Prices tumbled 18% this year. Wheat is the third- worst performer after corn and coffee among the eight commodities in the Standard & Poor’s Agriculture Index, which fell 20% and is heading for the biggest annual drop since 1998.
World corn output in the year that began Oct. 1 will be 964.28 million tons, compared with 962.83 million forecast a month earlier and up from 862.88 million a year earlier, the USDA said. Global soybean production will reach a record 284.94 million tons, compared with 283.54 million forecast last month and up from 268.02 million a year earlier.
Corn futures for March delivery fell 0.5% to $4.36 a bushel in Chicago. Soybean futures for January delivery slid 0.4% to $13.3825 a bushel after earlier touching a 11-week high at $13.535.
“There were no bullish surprises for corn and soybeans, and some traders are looking for even larger crop forecasts in January, when the USDA releases its next update,” Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana, said in a telephone interview. “Farmers are starting to come to the conclusion that the good times are ending as global production rebounds.”