Commodities Review: Wheat drops on higher output forecast
AP Business Writer
NEW YORK — Wheat futures fell sharply Friday after the government forecast increased U.S production and a record global crop, while corn futures surged to a new high on lingering concerns about the weather.
The U.S. Department of Agriculture predicted global wheat production will rise to a record 656 million tons in 2008 and 2009 after historically high prices prompted farmers around the world to plant more of the crop.
"The high price did its job and got the acres," said Jason Ward, an analyst at Northstar Commodity.
Consumption is also expected to surge, keeping global supplies at historic lows. Even so, the 2008-09 season "is expected to be the first crop in three years to exceed total consumption," the USDA said.
The department said U.S. winter wheat production is expected to jump 17 percent this year to 1.78 billion bushels. Total U.S. wheat production is forecast to rise 16 percent to 2.4 billion bushels.
Those forecasts helped push prices lower Friday.
"They're setting the bar high here, and the market's responding to that," Ward said.
July wheat futures fell 17.5 cents to settle at $8.045 a bushel on the Chicago Board of Trade.
Corn futures shot to another record high of $6.375 before retreating to settle a penny lower at $6.2925 a bushel on the CBOT. The Agriculture Department reported that it expects corn production this year to be down 7 percent from last year's record highs.
Traders have been pushing prices for the crop higher amid concerns about unusually wet weather throughout key growing areas in the Midwest. Another batch of rain showers moved through the region overnight and into Friday.
"In the central corn belt, where they'd like to be at least half planted by now, they're not able to," said Elaine Kub, a grains analyst with DTN in Omaha. "That's been the story for weeks, but it's exacerbated each day you get another storm moving across the Midwest."
Among other crop futures, July soybeans jumped 48 cents to settle at $13.53 a bushel on the CBOT, while rice futures for July delivery surged 62.5 cents to settle at $22.975 per 100 pounds, also on the CBOT.
Most other commodities advanced.
Gold for June delivery rose $3.70 to settle at $885.80 an ounce on the New York Mercantile Exchange, while July silver added 4 cents to settle at $16.91 an ounce and July copper futures fell 7.1 cents to settle at $3.7165 a pound.
Energy prices ended the week with new records.
Light, sweet crude oil futures for June delivery jumped to a new record of $126.25 on the Nymex before retreating slightly to settle up $2.27 at a record $125.96. June gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon.
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