World Wheat-Supply Estimate Lowered On Declining Ukraine Output

KIEV, Ukraine -- Global wheat inventories will be lower than forecast a month ago because of declining production in Ukraine, the U.S. Department of Agriculture said.

A Ukrainian wheat field.

Global stockpiles will total 177.77 million metric tons as of May 31, down 0.1 percent from 177.99 million forecast in January, the USDA said today in a report.

Seventeen analysts in a Bloomberg News survey estimated that inventories would drop to 177.19 million, on average.

Ukraine produced 16.85 million metric tons of wheat, down 2 percent from 17.2 million estimated last month, the USDA said. Before today, wheat futures surged 81 percent in Chicago after drought last year slashed output in Russia and Eastern Europe.

The U.S. has “one of the last stockpiles of milling wheat,” said Lawrence Kane, a market adviser at Stewart- Peterson Group in Yates City, Illinois.

“There’s a lot of wheat in the world, but the big issue is, how much high- quality wheat is in the world. That’s the $64,000 question.”

The U.S. may export 1.3 million bushels of wheat, the USDA said. The estimate was unchanged from last month and up 48 percent from the previous year.

Yesterday, futures for March delivery rose 15.5 cents, or 1.8 percent, to settle at $8.7425 a bushel on the Chicago Board of Trade.

U.S. wheat inventories at the end of May will total 818 million bushels (22.26 million tons), unchanged from last month’s estimate. Analysts expected stockpiles of 808.3 million bushels, on average.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

Source: Bloomberg