World Wheat Supply Tops Record as Harvest Gains Fuel Price Slide

(Businessweek) – Feb. 9 (Bloomberg) — World inventories of wheat will be the biggest ever before the next harvest, as expanded output in India, Kazakhstan and Morocco signal ample supplies and lower food prices, a U.S. government report showed.

Stockpiles will be 213.1 million metric tons as of May 31, up 1.5 percent from a January forecast, the U.S. Department of Agriculture said today in a report. Analysts had expected a drop to 208.69 million, based on the average of 15 estimates in a Bloomberg survey. India may harvest a record crop for a fourth year, and Kazakhstan will double output, the USDA said.

Wheat futures are down 26 percent in the past year, helping to reduce global food prices by 10 percent since reaching a record in February 2011. While inventories in the U.S., the world’s largest exporter, will drop for a second straight year, rising output from other countries means global stockpiles will advance 6.2 percent from a year earlier, according to USDA data.

“We’ve still got adequate wheat supplies,” Dewey Strickler, the president of Ag Watch Market Advisers in Franklin, Kentucky, said in an interview before the report. “World stocks are abundant. There’s no shortage.”

U.S. stockpiles will total 845 million bushels (23 million tons), compared with last month’s estimate of 870 million and analyst expectations of 860 million, the USDA said. Exports may total 975 million bushels, compared with 950 million estimated in January.

Yesterday, wheat futures for March delivery fell 0.2 percent to settle at $6.6075 a bushel on the Chicago Board of Trade.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2010, behind corn, soybeans and hay, government data show.

–Editors: Steve Stroth, Thomas Galatola

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

By Whitney McFerron