Wheat Futures May Fall in Chicago After USDA Raises Estimate of Supplies

Wheat may open 20 to 25 cents lower, heading for its biggest losing streak since January, after the U.S. unexpectedly raised its global stockpiles forecast today, said Mark Schultz, the chief analyst at Northstar Commodity Investments Co. in Minneapolis.

Inventories of the grain will total 181.9 million metric tons as of May 31, up 2.3 percent from a February forecast, the U.S. Department of Agriculture said in a report today. Analysts forecast a drop to 177.56 million tons, the median estimate in a Bloomberg survey.

Futures have climbed 55 percent in the past year after the worst drought in a half-century curbed production in Russia and wet weather hurt plants in Canada and Australia. Demand for the grain may decline as prices rise, said Jason Britt, president of Central States Commodities Inc. in Kansas City, Missouri.

“The job of higher prices is to ration the demand side,” Britt said by phone today. “Exports were lowered a little bit because of the higher prices. You would expect at these higher price levels, you’d better start having a little bit of a rationing scenario”

Wheat futures for May delivery fell 11.25 cents, or 1.5 percent, to $7.475 a bushel by 7:14 a.m. on the Chicago Board of Trade. Prices have dropped for four days in a row, the longest losing streak since Jan. 11.

(Source: http://www.bloomberg.com/news/2011-03-10/wheat-futures-may-fall-in-chicago-after-usda-raises-estimate-of-supplies.html)