Wheat Fluctuates on Dry Weather in U.S., Rainfall in China; Soybeans Rise

Wheat fluctuated in Chicago as investors waited to see whether dry weather curbed yields in the U.S., the world’s largest exporter, and if rain improved crop conditions in China, the biggest consumer.

Rain in drought-affected areas of China will stop after as much as 49 millimeters (1.9 inches) fell in the past four days, improving soil moisture, the Meteorological Administration said today. About 25 percent of the crop in Kansas, the biggest U.S. grower, was rated good or excellent as of Feb. 27, down from 27 percent a week earlier, government data showed.

“If a production shortfall in China is sustained and their wheat stocks are drawn down, higher wheat or other grains imports may be required, lending some support to international grain prices,” Chen Xin Yi, an analyst at Barclays Capital, said by phone from Singapore today.

Wheat for May delivery was unchanged at $8.17 a bushel at 11:08 a.m. London time on the Chicago Board of Trade. Prices rose as much as 0.8 percent and fell as much as 0.4 percent. The grain climbed 62 percent in the past year as drought in Russia and wet weather in Canada andAustralia curbed global production.

In Oklahoma, about 19 percent of the crop was in good or excellent condition, down from 21 percent at the end of January, while 40 percent had the highest ratings in Nebraska, compared with 41 percent a month earlier.

World Harvests

“Any U.S. wheat-production shortfall may have a larger impact on international wheat prices, as compared with a production shortfall in China,” Chen said.

Global production of the grain may expand 4 percent to 675 million metric tons in the year starting July 1 as higher prices encourage farmers to expand planting, the Australian Bureau of Agricultural & Resource Economics & Sciences said today. That compares with the International Grains Council’s forecast for a 3.7 percent gain to 672 million tons.

Milling wheat for May delivery traded on NYSE Liffe in Paris, the contract with the highest volume, added 0.4 percent to 250 euros ($345.87) a ton.

Soybeans for May delivery rose 0.6 percent to $13.7275 a bushel in Chicago. Corn for May delivery gained 0.3 percent to $7.33 a bushel.

(Source: http://www.bloomberg.com/news/2011-03-01/wheat-advances-for-a-third-day-as-dry-weather-threatens-china-u-s-output.html)