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Wheat Futures Slump as Rain Could Improve US Crops

March 22, 2017 at 15:15 by Andrew Moran

Wheat futures suffered their third consecutive loss on Wednesday as recent weather reports suggest rain could improve US crops. Wheat prices plummeted as much as 1% in intraday trading before paring those losses.

May wheat futures tumbled $1.25, or 0.29%, to $4.2525 per bushel at 14:45 GMT on Wednesday on the Chicago Board of Trade (CBoT). Wheat prices have been quite volatile this year, but they are relatively flat as wheat is up a little more than 1% year-to-date.

The latest weather forecasts are calling for rain in the wheat-growing regions of the US Great Plains. The weather reports say that rain could occur for the next 10 days. This is something that could significantly improve US crops, which have been rather dormant for most of March.

Experts note that the global wheat market is experiencing tremendous stockpiles and the yields are also looking good. Despite US crops being down this year, the Black Sea region has an abundance of wheat and European production is expected to be immense.

Higher stocks on the global market may be impacted by exports in China.

Reportedly, domestic wheat prices in Beijing are rising, a trend that is prompting small Chinese millers to either slow output levels or shut down operations. The wheat that is being sold at Chinese auctions are much higher than what is being offered by exporters, particularly in Algeria, Australia, and Egypt. Experts are now projecting that there will be a minor decrease in Chinese wheat production.

Relations between Russia and Turkey, which are turning sour, may also dampen the global wheat market.

Many nations may turn to US exports. With the US dollar dipping to a six-week low and production levels returning to normal, US exports are starting to become attractive to foreign markets. A declining greenback makes commodities like wheat cheaper to purchase for foreign investors.

Corn is also slipping midweek. May corn futures tumbled $0.75, or 0.21%, to $3.605 a bushel.

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