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Wheat Slips 1% Despite Global Production Forecasts Sliding

December 6, 2018 at 16:55 by Andrew Moran

Wheat futures slipped more than 1% on Thursday, despite global production forecasts declining. There was also industry news that the world’s third-largest economy, Japan, acquired more than 100,000 tonnes of the agricultural commodity from three major producers this week.

March wheat futures tumbled $0.07, or 1.35%, to $5.11 per bushel at 14:45 GMT on Thursday on the Chicago Board of Trade (CBoT). Wheat prices have advanced nearly 4% this year, but they have pared those gains by more than 4.5% since the beginning of September.

According to Japan’s Ministry of Agriculture, Tokyo purchased a total of 143,643 tonnes of food-quality wheat from the US, Canada, and Australia. This consisted of 62,975 tonnes from the US, 59,378 tonnes from Canada, and 21,290 tonnes from Australia. Japan is the world’s sixth-largest wheat importer as it is the second most important staple following rice.

The news comes as several major markets revised their forecasts down.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) reported that wheat production during the 2018–2019 season will total 16.95 million tons, down from initial estimates of 19.1 million tons. This is the lowest it has been since 2008.

The European Union (EU) recently updated its fourth-quarter projections and lowered its wheat output to 281.7 million tons, down from 283.5 million tons in September.

But US wheat acres are expected to rise next year as more farmers abandon soybean in favor of wheat. The US Department of Agriculture (USDA) anticipates wheat plantings for 2019 to expand 6.6% to 51 million acres.

In total, according to the International Grain Council (IGC), global grains production will tumble to a three-year low, falling by 24 million tonnes year-on-year. The biggest gains were seen in the US, India, and Russia.

In other agricultural commodities, March corn futures edged up $0.025, or 0.07%, to $3.68 per pound. January soybean futures tacked on $0.1475, or 1.71%, to $9.157 per bushel. January orange juice futures shed $0.0305, or 2.12%, to $1.408 a pound. March coffee futures dipped $0.007, or 0.66%, to $1.0525 a pound.

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