The worlds largest wheat producer China is expected to grow 2 million tons of wheat more than previously estimated in October, the International Grain Council reported on Friday. According to the London-based IGC, the harvest will surge to 698.4 million metric tons, compared to 654.9 million tons in the 2012-13 season.
Wheat plunged 25% on the Chicago Mercantile Exchange during the past 12 months. Futures for settlement in March rose yesterday by 0.57% to trade at $6.5975 per bushel.
The IGC report cited by Bloomberg, stated: “So far this year, harvests have generally been better than expected, while some of the output increase is set to be absorbed by higher use, a substantial surplus is expected and end-season stocks are seen up.”
Total Chinese wheat output was set at 120 million tons, 2 million tons more than last months estimate and almost unchanged in comparison with last years harvest of 120.6 million ton.
The USDA reported on Monday that 93% of the U.S. crop had emerged in the week ended November 24, surpassing the five-year average of 89% and last year’s 88% during the same period.
A slight deterioration in crop conditions however provided some support. The government agency said that 8% of the crop was categorized as “Very poor” and “Poor”, up 1% from a week earlier. Meanwhile, 62% of the plants were rated good-excellent, compared to 63% during the preceding seven days.
Global corn production is rising as well
IGC revised upwards its global corn output estimate, due to better-than-expected harvests in the Black Sea region. The Council forecast that global corn production will increase to 949.8 million tons, 1.4 million tons larger than last months projections and much higher than last years harvest of 862.7 million tons.
According to data by Bloomberg, wheat slumped 25 percent in Chicago in the past 12 months, the fifth-worst performer in the S&P GSCI gauge of 24 raw materials, while corn plunged by the most, 44 percent.
Corn was pressured after the U.S. Department of Agriculture said in its weekly crop progress report on Monday that the U.S. harvest accelerated from last week’s 91% and neared completion. Farmers had collected 95% of the corn crop in the week ended November 24, above the five-year average of 91% but below last year’s full completion during the comparable week.
Moreover, Shanghai JC Intelligence Co. reported on Wednesday that the authorities in southern Guangdong province this month rejected and held a cargo containing an unapproved variety of corn. This may delay US corn shipments to China.
China National Grain & Oils Information Center, cited by Bloomberg, announced November 20th that inspectors at Shekou port rejected a 60,000-metric-ton shipment of U.S. corn containing the MIR 162 variety developed by Syngenta AG (SYT), which hasn’t been approved by the Ministry of Agriculture.
The delayed purchases may further hurt corn prices.