Forexpros – Wheat futures were higher on Wednesday, recouping some of the previous day’s steep decline as traders digested Tuesday’s release of the U.S. Department of Agriculture’s Supply and Demand Report, which revealed tightening supplies.
On the Chicago Mercantile Exchange, wheat futures for May delivery traded at USD6.3050 a bushel during European morning trade, gaining 0.88%.
It earlier rose by as much as 0.95% to trade at a session high of USD6.3062 a bushel. Prices fell to as low as USD6.1950 on Tuesday, the lowest since March 30.
Wheat prices tumbled nearly 3% on Tuesday as agricultural commodities came under pressure from broader market risk aversion, which was sparked by growing concerns over Spain’s fiscal health.
The renewed euro zone debt woes came amid mounting fears over global growth prospects, especially in the U.S. and in China, the world’s two largest economies.
A deeper slowdown in the U.S. and China would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to the relative safety of the U.S. dollar.
But prices regained strength as market participants shifted their focus back to market fundamentals.
In its Supply & Demand Estimate Report published Tuesday, the U.S. Department of Agriculture lowered its estimate on U.S. ending stocks of the grain by 4% to 793 million bushels from a projection of 825 million last month.
The downward revision reflected a 35 million bushel increase in projected 2011-12 feed and residual use.
Exports of U.S. wheat for the 2011-12 season were projected at 1 billion bushels, unchanged from March but down 289 million bushels, or 22%, from 1.289 billion bushels in 2010-11.
The agency expected global wheat supplies to total 206.27 million tons in the current marketing season, 1.6% below last month’s estimate but still the highest in 11 years.
Global wheat production was projected at a record high 694.32 million tonnes, up 300,000 tonnes from March, and almost 7% above the previous season’s output level.
The previous record was 685.59 million tonnes, recorded in the 2009-10 season.
According to the USDA, the average price of U.S. wheat in 2011-12 was projected to range from USD7.20 to USD7.40 a bushel, compared with a range of USD7.15 to USD7.45 a bushel projected in March.
The U.S. is the largest wheat exporter, followed by Australia and Russia, according to the USDA.
Elsewhere on the Chicago Mercantile Exchange, corn for May delivery eased up 0.3% to trade at USD6.3712 a bushel, while soybeans for May delivery dipped 0.15% to trade at USD14.2375 a bushel.
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