Wheat futures tumbled after the US Department of Agriculture showed domestic production and quarterly stockpiles were bigger than analysts expected.
(Bloomberg) — Wheat futures tumbled after the US Department of Agriculture showed domestic production and quarterly stockpiles were bigger than analysts expected.
The agency raised its estimates for US wheat output when most analysts expected a cut. Chicago futures fell more than 6% after the midday report, settling at the lowest in three years. The losses deepened wheat’s fourth straight quarterly decline — the longest such route in 14 years — raising hopes for further relief from food inflation.
The surprise forecast stemmed in part from an unexpected boost in yields for spring varieties after rains late in the growing season. While the US is only the world’s fourth-biggest wheat exporter, the additional supplies add to a picture of a robust global cushion amid booming harvests in Russia and other key producers.
The heavy selling could portend further declines. “The charts are crashing and burning, making an outside day lower into new contract lows,” said Charlie Sernatinger, head of grains at Marex Capital Markets. “And as we all remember, new contract lows beget new contract lows.”
The USDA separately pegged domestic stockpiles of wheat and soybeans as of Sept. 1 at higher levels than traders expected, while corn inventories lagged expectations.
The USDA’s next world supply and demand update, known as the WASDE report and scheduled for release on Oct. 12, may not be published if a Congressional budget dispute shutters government offices.
–With assistance from Dominic Carey and Keira Wright.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.