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Wheat Craters 3% on Global Supply Concerns

July 2, 2018 at 16:51 by Andrew Moran

Wheat futures cratered more than 3% to start the trading week. After plunging more than 7% in June, wheat prices are adding on to their recent string of losses amid concerns about a global supply glut.

September wheat futures plummeted $0.1525, or 3.04%, to $4.86 per bushel at 16:22 GMT on Monday on the Chicago Board of Trade (CBoT). Wheat prices kicked off the trading session climbing above the crucial five-cent threshold, but they have since pared their gains, slipping to a one-week low.

Over the last 12 months, wheat has crumbled nearly 20%, but it has advanced about 4% year-to-date. This has allowed investors to pick up some bargains in the commodity market over the last month.

In recent days, there have been multiple reports highlighting concerns about future wheat output levels.

The International Grains Council (IGC) reported on Monday that poor Russian, Australian, and European crops will send production volumes to their lowest levels in three years. Heavy rainfall was the primary culprit for last week’s downgrade of French grains, though some industry observers say France does anticipate a good year for output.

But any production cuts might be offset by the latest efforts of US and Canadian farmers.

According to Statistics Canada, farmers have planted more wheat and barley in 2018 and less canola and lentils. For the first time in four years, Saskatchewan farmers planted 15% more wheat and 16% more barley, compared to canola and lentil declines of 3.5% and 15%, respectively. Soybean planting is also down 52% from last year.

Meanwhile, south of the border, the US Department of Agriculture (USDA) reported that annual wheat plantings for harvest in 2018 are up 4% from 2017 to 47.821 million acres. The USDA further confirmed that soybean and corn stock estimates were higher than market forecasts.

In other agricultural markets, December corn futures tumbled $0.09, or 2.42%, to $3.622 per pound. November soybean futures slid $0.04, or 0.45%, to $8.76 a bushel. August orange juice futures rose $0.0375, or 2.34%, to $1.641 a pound. September coffee futures shed $0.0295, or 2.56%, to $1.121 per pound.

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