(Bloomberg) – Wheat rose for a second day in Paris and Chicago as earlier declines spurred nations such as Jordan and Saudi Arabia to issue import tenders at a time that the area planted in the U.S. is set to shrink.
Iraq is also seeking to buy the grain, while Egypt, the largest wheat importer, recorded its biggest purchase in almost a year Thursday. Wheat prices falling for a fourth year on the Euronext and the Chicago Board of Trade are boosting demand, with Tunisia and Algeria also issuing tenders to buy the durum variety this week.
Wheat production in the 2015-16 season that began in July will be 1 million metric tons higher than previously forecast, the International Grains Council said Thursday. That’s helping drive prices lower and will result in U.S. farmers planting the smallest acreage with the grain in 46 years, Commerzbank said in a report e-mailed Friday, citing the U.S. Department of Agriculture’s first forecasts for next season that were released Thursday.
The market is “getting some demand to help price action,” Matt Ammerman, a commodity risk manager at futures and options brokerage INTL FCStone Inc., said in an e-mailed report Friday. The USDA acreage estimates are “showing the trend right now for farmers.”
Biggest Purchase
Milling wheat for May delivery gained 0.3 percent to 154 euros ($170) a metric ton on the Euronext exchange by 12:59 p.m. in Paris. On the Chicago Board of Trade, futures for the same month rose 0.3 percent to $4.5525 a bushel. Both rose for a second day.
Egypt’s state-run buyer, the General Authority for Supply Commodities, bought 300,000 tons of wheat in a tender Thursday, the largest purchase since April 18, data compiled by Bloomberg showed. Saudi Arabia is seeking 770,000 tons in a tender closing Saturday, while Jordan is seeking 100,000 tons on March 1 and Iraq 50,000 tons on March 6.
U.S. farmers will plant 51 million acres (21 million hectares) of wheat this year, down 6.6 percent on last year and less than the 52.4 million acres analysts had estimated in a Bloomberg survey. The drop to the lowest in almost half a century is due to weak prices and profitability, analysts including Carsten Fritsch said in the Commerzbank report.
“This kind of number may support U.S. wheat prices as the May 2016 contract trades slightly above the $4.50 a bushel level, which remains a major psychological support,” Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland, said in an e-mailed report Friday.
In other markets:
- Corn for May delivery rose 0.1 percent to $3.61 a bushel on the Chicago Board of Trade as soybeans for the same month gained 0.2 percent to $8.6725 a bushel
- Soybean meal for May rose 0.1 percent to $262.90 per 2,000 pounds
- The USDA will release additional supply and demand forecasts Friday
