Wheat falls on new UN production forecast

AP News
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Posted: Jun 07, 2011 4:05 PM
Wheat falls on new UN production forecast

Wheat prices dropped Tuesday after a United Nations agency predicted global production will increase this year.

Wheat settled down 1.4 percent while other commodities were mostly higher as the dollar grew weaker. Commodities are priced in dollars so a weaker dollar makes them cheaper for buyers who use other currencies.

The United Nations Food and Agriculture Organization predicted that global wheat production will increase 3.2 percent this year.

Growing conditions have improved for crops in parts of Europe and Russia, which should produce better yields in Russia and nearby countries, the organization said in its biannual Food Outlook.

In addition, Russia is expected to lift a ban on exports in July, nearly a year after it was imposed when the country's wheat crop was damaged by a drought.

The organization cautioned, however, that it expects global food prices to remain high into 2012 because stockpiles of many agricultural products have declined.

Telvent DTN analyst John Sanow said he expects wheat supplies to reach a "historically comfortable" level globally this year despite adverse weather that has hurt the U.S. crop.

In contracts for July delivery, wheat fell 10.25 cents to settle at $7.3375 a bushel, corn rose 4.5 cents to $7.365 a bushel and soybeans rose 10.75 cents to $13.94 a bushel.

The U.S. Agriculture Department is expected to release an updated global supply and demand picture for several crops Thursday.

In other trading, benchmark crude for July delivery rose 8 cents to settle at $99.09 per barrel on the New York Mercantile Exchange.

In other Nymex contracts, heating oil rose 5.96 cents to settle at $3.077 per gallon, gasoline gained 4.2 cents to $2.9919 per gallon and natural gas gained 0.04 cent to $4.831 per 1,000 cubic feet.

In July contracts, silver rose 26.4 cents to settle at $37.046 an ounce, copper rose 0.75 cent to $4.1495 a pound and platinum gained $9.50 to $1,830.70 an ounce. August gold fell $3.20 to settle at $1,544 an ounce and September palladium rose $10.80 to $809.50 an ounce.