World wheat inventories will be 2.4 percent larger than forecast a month ago, as output increased from Australia and Canada, the U.S. Department of Agriculture said.
Global stockpiles will total 176.72 million metric tons at the end of the marketing year on May 31, up from 172.51 million forecast last month, the USDA said today in a report. Seventeen analysts in a Bloomberg News survey estimated that inventories would drop to 171.3 million, on average.
Previous projections may have “overstated” the impact of floods in Canada and Australia, the third- and fourth-largest wheat exporters this year, said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC in Chicago. The USDA said Canada may produce 23.17 million tons, up 4.4 percent from last month’s estimate, and Australia may harvest 25.5 million, up 6.3 percent.
“When we have very poor conditions, we have a tendency of overstating damage,” McCambridge said. “Then when the crop comes out of the field and we can assess and measure it, we start getting to the real number.”
Ample precipitation early in eastern Australia’s growing season spurred the country to boost its domestic production forecast to a record on Dec. 7. The impact of recent excessive rains, which delayed harvesting and cut crop quality, won’t be known until more of the harvest is completed in the south, the Australian Bureau of Agricultural & Resource Economics & Sciences said.
Eastern Australia’s “production potential was really good for most of the growing season because they were getting good rain and everything was looking great,” Mike Tannura, the president of T-Storm Weather in Chicago, said before today’s USDA report. “What’s happened now is that it hasn’t stopped raining during harvest.”
Australia’s September-to-November spring was the wettest on record, the country’s Bureau of Meteorology has said.
Wheat futures for March delivery rose 4.5 cents, or 0.6 percent, to settle at $7.885 a bushel yesterday on the Chicago Board of Trade. The most-active contract has surged 64 percent since the end of June, after drought slashed crops in Russia and dry weather in the U.S. Great Plains threatened winter crops.
U.S. Inventories
Unsold U.S. supplies at the end of May will total 858 million bushels (23.4 million tons), up 1.2 percent from a November estimate, the USDA said. Analysts expected 842.3 million bushels.
The U.S. is projected to be the largest exporter this year, followed by France, according to data from the International Grains Council and FranceAgriMer.
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.
To contact the reporter on this story: Whitney McFerron in Chicago atwmcferron1@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
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