Forexpros – Wheat futures slumped to a two-day low on Wednesday, 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 USD6.0125 a bushel during early European afternoon trade, shedding 0.52%.
It earlier fell by as much as 0.85% to trade at a two-day low of USD6.0025 a bushel.
CBH Group, the crop handler for Western Australia, said earlier that grain output in the region, which typically produces more than 33% of the national wheat harvest, rose to an eight-year high of 14.7 million tonnes.
The industry group added that it expected the wheat harvest in Western Australia to total 14.9 million tonnes, significantly higher than initial forecasts of a 13.5 million-tonne crop.
The upbeat crop outlook comes after the country’s official crop bureau last week projected Australia’s wheat harvest to hit a record 28.3 million tonnes.
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 said last week that global wheat supplies were forecast to rise to 210.02 million tons in the 2011-12 season, the most since the 2000-01 season, as countries from Australia to Russia raised output.
The oversupply concerns prompted Swiss lender Credit Suisse to cut its average wheat price forecast for 2012, citing “plentiful world supplies”.
In a report published Tuesday, the bank expected wheat prices to average USD6.25 a bushel in 2012, down from a previous estimate of USD6.90.
The bearish outlook comes a day after Wall Street investment bank Goldman Sachs cut its three-month wheat forecast to USD6.20 a bushel from USD6.70.
Wheat prices remained supported amid concerns over the U.S. winter-wheat crop after forecasts pointed to frigid, crop-damaging weather in the winter wheat belt.
Elsewhere on the Chicago Mercantile Exchange, corn for March delivery dropped 0.55% to trade at USD6.0063 a bushel, while soybeans for March delivery traded at USD11.7475 a bushel, retreating 0.7%.
Forexpros
