Friday, January 18, 2019
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Wheat Snaps Rally as Supply Outlook Counters U.S. Weather

Wheat fell, halting a six-day advance, on indications improved growing conditions from Europe to Australia may compensate for deteriorating crops in the U.S., the world's biggest exporter.

Rising supplies in most exporting nations and reduced shipping delays in Canada after last year's record harvest will cap the current rally, Rabobank International wrote yesterday. Global inventories before the start of the Northern Hemisphere harvest will rise 5.7 percent this season, the first increase since 2009-2010, the U.S. Department of Agriculture estimates. Wheat has gained 18 percent this year.

Wheat for July delivery fell 0.2 percent to $7.1525 a bushel on the Chicago Board of Trade before a pause in trading at 7.45 a.m. Futures trading volumes were 23 percent higher than the average for the past 100 days for the time of day, according to data compiled by Bloomberg. Prices climbed for a sixth day yesterday and are still set for a third monthly advance, the longest run since September 2012.

"Price action has not consistently been following direction from U.S. weather concerns," Duane Lowry, the publisher of Early Market News in Maynard, Iowa, wrote in a report today. "Global weather forecasts/conditions offer a much more bearish theme."

About 34 percent of U.S. winter wheat was in poor or very poor condition as of April 27, up from 33 percent a week earlier, USDA data show.
Crop Conditions

Hard-red winter-wheat "crop conditions remain particularly worrisome, providing support to U.S. futures," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note today. "However, crop conditions in other parts of the world are said to be improving."

Heavy rains in the North China Plain, the country's main wheat-growing area, improved moisture for crop development after hot and dry conditions in March caused crop stress there, forecaster Martell Crop Projections wrote in a report yesterday.

European wheat-growing regions from eastern France to the Black Sea, as well as Turkey, are forecast to receive above-average rainfall in the next two weeks, data from World Ag Weather show. Parts of Western Australia may also have more precipitation than normal in the period, forecasts show.

Milling wheat for November delivery traded on Euronext in Paris fell 0.1 percent to 205 euros ($284.23) a metric ton.
Europe Rainfall

"Further rains are still needed for European crops," U.K. grain trader Gleadell Agriculture Ltd. wrote in a market comment. "For most of mainland Europe this rain is in the forecasts over the next two weeks though."

The European Union raised its estimate for usable production to 143.6 million tons this week, from a March forecast of 143.1 million tons. In Australia, the fourth-biggest exporter, rain is forecast for southeast crop regions this week, boosting soil moisture as farmers begin planting, according to the Bureau of Meteorology.

Corn for July delivery declined 0.7 percent to $5.1775 a bushel. Prices are set to advance a fourth month, the longest rally since October 2010. Soybeans fell 0.3 percent to $15.12 a bushel, heading for a third monthly gain.

To contact the reporters on this story: Phoebe Sedgman in Melbourne at This email address is being protected from spambots. You need JavaScript enabled to view it. ; Rudy Ruitenberg in Paris at This email address is being protected from spambots. You need JavaScript enabled to view it.

To contact the editors responsible for this story: Claudia Carpenter at This email address is being protected from spambots. You need JavaScript enabled to view it. Whitney McFerron, John Deane

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