U.S. wheat prices dropped to the lowest in almost a decade as a global glut of the grain looks set to increase.
Futures for September delivery in Chicago declined as much as 1.6 percent to the lowest since September 2006. The most-active contract slid 8.7 percent in July for the biggest monthly drop in a year.
Bumper harvests around the world have boosted supplies and sent prices down in the past three years. Wheat crops are significantly exceeding expectations in the U.S. and some former Soviet countries, the International Grains Council said in a report on Thursday. Stockpiles in 2016-17 will be bigger than previously thought and about 4 percent larger than a year earlier, it said.
“The U.S. just has a lot of wheat to get through” said Matt Ammermann, a commodity risk manager at futures and options broker INTL FCStone Inc. in Plymouth, Minnesota.
Wheat for September fell 0.6 percent to close at $4.07 3/4 a bushel on the Chicago Board of Trade. Prices slid for a fourth day, the longest run in a month.
Russia, the world’s biggest wheat supplier, is also expected to reap a record crop, while France is set to have the smallest harvest in more than a decade after rains damaged plants. With the quality of French supplies in question, that may boost demand for grain from other countries.
“We are getting cheap enough that we should see demand come back to the U.S., which should support prices going forward,” Ammermann said.
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