Forexpros – Wheat futures resumed their downward trend on Tuesday, as expectations for a record wheat crop in Australia added to the view that world supplies are sufficient to meet global demand.
On the Chicago Mercantile Exchange, wheat futures for March delivery traded at USD6.3762 a bushel during European morning trade, shedding 0.53%.
It earlier fell by as much as 0.87% to trade at a session low USD6.3512 a bushel.
Wheat prices came under pressure after Australia’s Bureau of Agricultural Resource Economics and Sciences raised its forecast for Australian wheat production to a record-high 29.5 million tonnes in the current marketing year, 4.3% more than previously estimated and beating last year’s record crop of 27.9 million tons.
Wheat output in Western Australia, set to be the nation’s biggest producer, may total 11.7 million tons, more than double last year’s crop and 16% higher than the December estimate, according to the bureau’s report.
Australian wheat shipments were expected to total 22.3 million metric tons in the year to September 30. The figure is 3.2% more than forecast on December 6 and 20% higher than a year earlier.
Wall Street investment bank Morgan Stanley said in a report earlier that wheat prices were expected to underperform corn and soybeans in the near-term, citing “flush supplies” from Australia and Europe.
Australia is forecast to become the world’s second largest wheat exporter in the 2011-12 season.
A higher crop outlook for the Pacific nation could result in reduced demand for U.S. supplies, which is the world’s third largest wheat producer and biggest exporter of the grain.
The U.S. Department of Agriculture last week raised its estimate for global wheat supplies before the 2012 Northern Hemisphere harvest to an all-time high 213.1 million metric tons, 1.5% higher than January’s projection and 6.2% more than last year.
The prior record was set in the 1999-2000 season, when stockpiles reached 210.7 million tons.
Wheat-production estimates for the U.S. in 2012-2013 may be revised higher should improvements in the weather be sustained, according to the Morgan Stanley report.
Elsewhere on the Chicago Mercantile Exchange, corn for March delivery dropped 0.35% to trade at USD6.3738 a bushel, while soybeans for March delivery traded at a four-month high of USD12.5513 a bushel, gaining 0.25%.
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