Wheat drops for fourth day, nears 19-month low on supply outlook

Wheat declined for a fourth day in Chicago, trading near the lowest level in 19 months, on an outlook for record global supplies of the grain.

Prices fell 22% this year, closing in on the biggest annual drop since 2008, as the U.S. Department of Agriculture forecasts a world crop at an all-time high of 711.4 million metric tons. Inventories before the 2014 harvest will rise 4% to 182.8 million tons, the USDA estimates. Wheat prices increased 19% last year as a drought gripped the U.S.

“Strong production of key crops across the world has helped remove the support witnessed in previous years, when adverse weather caused several major price spikes,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Hellerup, Denmark, wrote in a report today.

Wheat for delivery in March retreated 0.1% to $6.055 a bushel by 7:05 a.m. on the Chicago Board of Trade. The grain reached $6.0075 yesterday, the lowest level since May 2012, and is set for a fourth weekly drop. Prices fell 9.5% this month, the most since December 2012. Trading volume was 52% below the average for the past 100 days for the time of day, data compiled by Bloomberg show.

Milling wheat for the same delivery month traded on NYSE Liffe in Paris fell 0.5% to 205.25 euros ($283.98) a ton.

“Buyers aren’t yet showing a large appetite for taking new positions at the end of the year,” Paris-based farm adviser Agritel wrote in a market comment.

Analyst Survey

U.S. export sales of wheat probably declined in the week ended Dec. 19 from a year earlier, according to a survey of four analysts by Bloomberg. The USDA is scheduled to release its sales report today.

“The U.S. is still trying to get competitive,” said Graydon Chong, an analyst at Rabobank International in Sydney.

Egypt, the world’s largest wheat importer, bought grain from Romania and Russia in a tender last week, shunning offers of French and U.S. wheat.

Corn for delivery in March was unchanged at $4.2625 a bushel in Chicago, for a 1.6% weekly drop. The grain plunged 39% this year, set for the biggest annual slide since at least 1965. Soybeans for the same delivery month added 0.3% to $13.095 a bushel, trimming the weekly decline to 1.6%. The oilseed lost 7.1% this year.

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