Wheat advanced for a second day in Chicago on bets that world grain inventories will be less ample than estimated after a government report showed dwindling production in Canada.
Canadian farmers may produce 27.7 million metric tons, dropping from a record 37.5 million tons in 2013, according to Statistics Canada yesterday. Wheat prices have shed 13% in the past year as world output was projected to hike to an all-time record, the US Department of Agriculture forecasts.
Economist Dennis Gartman wrote that Canada’s projection “was sufficient news to rally the wheat market from its lows,” Bloomberg reported. Prices were also affected by slumping crop quality in Europe and Black Sea region, the daily Gartman Letter columnist added.
December-settlement wheat futures increased 0.3% to $5.5725 per bushel as of 6:31 am on the Chicago Board of Trade, adding to its yesterday’s 1% rise. Prices were still lower 1.1% this week. Milling wheat for November delivery added 0.6% to 172.50 euros per ton on Euronext in Paris.
Global wheat output may increase to a record 716.09 million tons in 2014-2015, the USDA reported in Aug.12. Canada is one of the largest exporters in the world, second to the US in the past season, according to International Grains Council and Eurostat figures.
In the meantime, Asian feed grain importers expect to buy damaged wheat crop from Ukraine and France due to heavy rains across Europe, which has rendered the product unfit for human consumption.
Importers in South Korea, Thailand and the Philippines will probably switch to wheat from corn, a move that will pressure corn prices already flirting with near four-year lows on speculations of record yields in the US.
“There is no shortage of feed wheat around and we may see some of that come to Asia as freight rates are reasonably cheap,” Paul Deane of Melbourne-based ANZ Bank told Reuters.
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