Commodity Blog

Commodity Prices – Wheat

Wheat fell today on the speculation that importers would turn from US and European supplies to exports from Russia. First Deputy Prime Minister Viktor Zubkov said yesterday that Russia’s output may total 90 million metric tons this year, while exports would reach 1.5 million tons in July. Prime Minister Vladimir Putin predicted last month that production would total 85 million tons. September futures for delivery wheat dropped $0.0575 (0.8 percent) to $7.0125 per bushel at 13:15 on CBoT.

Gold capped the longest rally since November 2009 today on concerns about the debt problems in the US and Europe. Standard & Poor’s warned that it may cut the US credit rating. Eight banks failed the stress test of the European Union banks. August futures for gold delivery gained $0.8 to $1,590.10 as of 13:37 on COMEX, reaching a new all-time record.

Crude oil gained after the report about the employment in the US showed better-than-expected change. The US employers added 157,000 jobs last month, while estimates of analysts promised increase by only 67,000. August futures for delivery of crude oil rose $2.02 to $98.67 per barrel on NYMEX, the highest price since June 14.

Wheat fell on the forecast that good weather in the US and Western Europe will help crops. The return of Russia to export market is expected to increase supply of wheat, further reducing prices. Contract for delivery of wheat in September dropped $0.0775 (1.2 percent) to $6.1925 per bushel by 10:49 on CBoT.

Copper futures climbed to the highest in almost three months on concerns that adverse weather in Chile, the biggest producer in the world, and the strike at the Grasberg mine in Indonesia will disrupt supplies. The positive employment data also helped the industrial metal. Futures for delivery of copper in September advanced as much as $0.107 (2.5 percent) to $4.442 per pound as of 13:18 on COMEX, following the jump to $4.4435, the highest settlement since April 12.

Crude oil gained today on improving prospects for growth of China’s and the US economies that may result in higher demand for fuel. The US factory orders increased 0.8 percent in May, following the 0.9 percent drop in April. China’s service industries grew with the second-fastest rate this year. August futures for delivery of crude oil advanced $1.95 to $96.89 per barrel on NYMEX. August contract for Brent oil delivery rose as much as $2.22 (2 percent) to $113.61 per barrel on ICE.

Wheat fell today on forecast that rains will slow harvest in the US. Parts of Nebraska may receive as much as 4 inches of precipitation in the next two days, according to Joel Widenor, the director of agricultural services at the Commodity Weather Group LLC. Some areas of Kansas, the biggest winter-wheat growing state in the US, may get 1.5 inches of rain. The slowdown likely won’t have serious impact on the harvest as the US Department of Agriculture reported that 44 percent of the winter crop was already harvested as of June 26, compared the five-year average of 37 percent. September futures for delivery wheat gained $0.2325 (3.8 percent) to $6.355 per bushel by 13:15 on CBoT.

Corn and wheat slumped today as planted area reported by the US Department of Agriculture was bigger than estimated by analysts.

US farmers planted 92.282 million acres of corn this year, 1.8 percent above analysts’ estimates and the second biggest area planted by corn since 1944. US inventories were 3.67 billion bushels as of June 1, 12 percent above predicted amount. As much as 13.627 million acres were planted by spring wheat, 2.6 percent higher than forecasts. Stockpiles were 861 million bushels as of June 1, beating market expectations by 4.6 percent.

Cheaper corn, used for feeding cattle, may result in meat prices drop. Corn also used for production of ethanol, so lower prices for the grain may translate in lower fuel prices.

December futures for delivery of corn dropped by the exchange limit of $0.3 (4.6 percent) to $6.205 per bushel by 13:15 on CBoT, the biggest decline since November 16. September futures for delivery of wheat slumped by the limit of $0.6 (8.9 percent) to $6.1425 per bushel, the lowest settlement since July 29.

Crude oil advanced for the second day today as the US inventories dropped more than predicted. The Energy Information Administration reported that the US stockpiles of crude fell by 4.4 million barrels to 359.5 million barrels last week, while market participant anticipated a decline by only 1.5 million barrels. August futures for delivery crude oil gained $1.88 to $94.77 per barrel on NYMEX.

Wheat jumped to the highest level in almost six weeks as excessive precipitation in the north of the US hurt crops. The US Department of Agriculture reported that about 69 percent of the spring-wheat crops were in good or excellent condition as of June 26, compared to 72 percent in the week before. Futures for delivery wheat in September climbed $0.21 (3.2 percent) to $6.7175 per bushel as of 13:15 on CBoT.

Gold gained today as the previous drop to the lowest level in five weeks attracted investors to the metal. Futures on gold reached $1,490.80 per ounce on June 27, the lowest settlement since May 20. Futures for delivery of gold in August went up $10.20 (0.7 percent) to $1,510.40 by 13:43 on COMEX.

Corn and wheat fell on the forecast that favorable weather will boost yield. Rainfall in the UK and France should boost crops that were already planted, as well as those that will be planted later. Stronger dollar curbed appeal of US commodities and attracted traders to Europe. December futures for corn delivery slid $0.03 (0.5 percent) to $6.57 per bushel as of 10:35 on CBoT.

Sugar reached the highest level in two months on concerns about disruptions of supplies from Brazil. Shipments of Brazilian sugar are expected to be delayed for another 20 or 30 days. October futures for delivery of raw sugar rose $0.0083 (3.3 percent) to $0.2621 per pound by 14:00 on ICE. The price for thee most-traded contract reached touched $0.2631, the highest level since April 12. Futures advanced 3.4 percent last week.

Cocoa fell on the speculation that there will enough supply to satisfy demand. INTL Hencorp Futures LLC predicted that a global surplus of cocoa will be 156,000 metric tons by September. The strengthening dollar also had its negative impact on commodities, including cocoa and wheat. September delivery for cocoa tumbled as much as $89 (3 percent) to $2,886 per ton as of 12:01 on ICE, posting the biggest drop since May 5.

Supply of wheat is also expected to be ample and therefore prices went down. Russia plans to lift the ban on exports by July 1, while rainy weather should help the crops in Ukraine. The US Department of Agriculture increased its forecast for global inventories on June 9 to 184.26 million metric tons, up 1.7 percent from the forecast in the previous month. Futures for delivery of wheat in September sand $0.31 (4.2 percent) to $7.0825 per bushel by 13:15 on CBoT after it reached $7.0325, the lowest price since March 17.

Corn, soybeans and wheat fall as the US economy showed signs of weakness and the European debt crisis worsened.

The inflation slowed and the industrial production increased less than predicted in the US. The production ethanol dropped 3.8 percent last week, the biggest decline since April. Ethanol is produced mainly from corn.

Problems in Greece intensified as protesters went on demonstrations against the planned wage cuts and tax increases. The austerity measures are required to receive new portion of the bailout that was planned last year. Greece’s Prime Minister George Papandreou may resign from his office.

December futures for corn delivery slipped $0.15 (2.2 percent) to $6.70 per bushel as of 11:24 on CBoT. November futures for soybean delivery fell $0.03 (0.2 percent) to $13.6075 per bushel. Futures for wheat delivery in September slid $0.0225 (0.3 percent) to $7.5975 per bushel by 9:34.

Futures on wheat gained for the fist time in three sessions on forecast that the renewed Russia’s exports won’t be enough to satisfy demand. Supply of the commodity is likely to decline as adverse weather in the US and Europe may hurt crops. July contract for delivery of wheat went up $0.105 (1.4 percent) $7.6975 per bushel as of 13:15 on CBoT.

Gold decline as the rebound of the euro reduced demand for the precious metal as a safe haven. The European currency gained 1.3 percent after Germany’s Chancellor Angela Merkel said that her country is committed to the stability of the euro. Futures for delivery of gold in August slipped $10.50 (0.7 percent) to $1,532.70 by 13:38 on COMEX.

Crude oil advanced after the dollar fell as Moody’s Investor Service put the US credit rating on review for downgrade. The rating agency will cut the debt rating of the North American country if there would be no progress in increasing the debt limit. July futures for crude oil delivery traded at $100.40 per barrel on NYMEX following the fall by 1.8 percent to $98.46.

Futures on wheat slid today as the wet weather in Europe may boost crops, while Russia plans to lift its ban on exports. Rains improved prospects for harvest in Germany and may help crops in France this week. Russia, one of the biggest exporters of wheat in the world, will renew exports on July 1. July contract for wheat delivery slipped $0.23 (2.9 percent) to $7.5925 per bushel as of 13:15 on CBoT.

Rains in the US had opposite effect on corn, slowing planting and boosting the commodity. The government report said yesterday that 86 percent of the crop was planted by May 29, compared to the five-year average of 95 percent. Midwest had strongest rains and farmers of the region may decide to take insurance instead of planting. Futures on corn for delivery in July gained as much as $0.11 (1.5 percent) to $7.585 per bushel.