Clouds Over Europe Send Wheat Rising

(Wall Street Journal) – Wheat prices jumped to a one-month high on speculation that demand for U.S. inventories will improve as excessive rainfall threatens crops in Europe.

Persistent storms in parts of France, Germany, Poland and several other European countries have lowered wheat quality and are stalling harvests, according to private weather forecasts Tuesday. That may force overseas importers of the grain to turn to the U.S. for supplies, analysts said.

Export demand for U.S. wheat has been rising, fueled by a sharp drop in the price of the grain this summer. U.S. shippers sold 801,000 metric tons of wheat for delivery in the 2014-15 season in the week ended July 24, up 81% from the prior week, the U.S. Agriculture Department reported last week. Nigeria, Panama and Brazil were the largest buyers.

“We have just enough [bullish] news to keep wheat supported,” said Jack Scoville, vice president for brokerage Price Futures Group in Chicago. “The export numbers are hanging in there, so it’s far from a hopeless market.”

Wheat futures for September delivery rose 8.5 cents, or 1.6%, to $5.525 a bushel at the Chicago Board of Trade, the highest settlement price for a front-month contract since July 3.

Wheat prices have fallen 23% since the end of April, weighed down by forecasts for higher global inventories, as well as steep declines in corn and soybean prices. The USDA last month forecast that global wheat stockpiles will rise nearly 3% in the 2014-15 season that began June 1, in part because of reduced use of the grain in livestock feed. Wheat last month traded at the lowest level in four years.

Overseas sales of U.S. hard-red winter wheat—high-protein varieties used to make bread—are expected to be especially strong this year because little quality grain will be available globally, said Larry Glenn, an analyst with brokerage Frontier Ag in Quinter, Kan.

Sales of hard-red varieties since the beginning of the 2014-15 season are nearly on par with last year’s pace, even as demand wanes for soft-red winter wheat, low-protein grain that generally is used in animal feed and bakery items such as cookies and cakes.

Corn and soybean futures fell Tuesday, pressured by mostly favorable weather and largely positive ratings of the crops’ condition in a USDA report Monday.

Soybean futures for August delivery, the thinly traded front-month contract, fell 9.75 cents, or 0.8%, to $12.2275 a bushel, while the November contract, the most-active by volume, declined 13.75 cents, or 1.3%, to $10.6575 a bushel.

Corn futures for September delivery fell 2.5 cents, or 0.7%, to $3.5625 a bushel. December contracts dropped 2 cents, or 0.5%, to $3.6725 a bushel.