U.S. wheat inventories this year will be about 8 percent smaller than the government forecast in January because of stronger export demand. Prices gained.
U.S. reserves on May 31 will be 558 million bushels, compared with 608 million bushels (16.5 million metric tons) forecast in January, the U.S. Department of Agriculture said today in a monthly report. Analysts surveyed by Bloomberg were expecting 606 million, on average. Exports will total 1.175 billion bushels, up 4.4 percent from last month’s forecast.
Global inventories before the start of the 2014 harvest in June will be 183.73 million tons, compared with 185.4 million predicted in January. Analysts surveyed by Bloomberg were expecting 185.3 million, on average.
The increase in exports “was a little bit of a surprise,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview. “You’re getting a little bit of a short covering. The report wasn’t earth-shattering.”
Wheat futures for March delivery climbed 1.5 percent to $5.86 a bushel at 11:58 a.m. on the Chicago Board of Trade. Prices dropped 24 percent in the 12 months through Feb. 7 on the outlook for climbing global production.
World output in the 12 months that end May 31 will total 711.9 million tons, compared with 712.7 million forecast last month, the USDA said. The global harvest will be 8.5 percent larger than a year earlier.
Higher production signals “an overall bearish picture,” Grow said.
Cereal costs tracked by the United Nations fell 23 percent in 12 months through January, compared to a 4.4 percent drop in the agency’s world food price index.
The USDA forecast prices at the farm will average $6.65 to $6.95 a bushel in the 12 months that began June 1, compared with $6.60 to $7 estimated a month earlier.