Wheat Falls on Dollar Gain, Production Outlook; Soybeans Tumble

By Jae Hur

Aug. 26 (Bloomberg) -- Wheat declined for a third day as the dollar strengthened, making U.S. grain less attractive to buyers overseas, and on speculation favorable weather in major producing countries will help increase harvests. Soybeans dropped.

Prices lost 6.2 percent in the previous two days as rain in the southern U.S. Great Plains helped build soil moisture for plants that will be seeded starting next month. Wheat has fallen 36 percent from a record $13.495 a bushel on Feb. 27 on forecasts for higher global output after prices climbed 77 percent in 2007.

``Wheat supplies will rise as production increases in the Northern and Southern hemisphere on good weather,'' Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said from Tokyo. Wheat-growing areas in Australia and Argentina may get rain later this week, he said.

Wheat for December delivery fell as much as 14.25 cents, 1.7 percent, to $8.505 a bushel in after-hours electronic trading on the Chicago Board of Trade and was at $8.53 at 4:22 p.m. Singapore time.

The dollar rose for a third day against the euro, making the U.S. grain more expensive for importers holding other currencies. The euro fell as much as 0.6 percent to $1.4669. It reached $1.4631 on Aug. 19, the lowest since Feb. 20.

Farmers around the world will harvest a record 670.8 million metric tons in the year that started June 1, up 9.9 percent from the previous year, the U.S. Department of Agriculture said on Aug. 12. Reserves may jump 18 percent to 136.2 million tons by May 31.

Western Australia

Australia, forecast to be the world's third-largest exporter of wheat, may get rain this week in its two biggest grain-growing states, the National Climate Center said.

Western Australia may receive between 10 millimeters and 25 millimeters of rainfall this week, with totals higher in northern regions, Shoni Dawkins, climatologist with the center said today by phone from Melbourne. Cropping regions in New South Wales may get 10 millimeters, with falls above 25 millimeters in some areas, later in the week, he said.

Corn for December delivery declined as much as 7 cents, or 1.2 percent, to $5.93 a bushel and traded at $5.955 as of 4:29 p.m. in Singapore. The price has fallen 25 percent from a record $7.9925 on June 27.

Soybeans for November delivery fell as much as 29.25 cents, or 2.2 percent, to $13.1775 a bushel and traded at $13.18 as of 4:30 p.m. in Singapore as vegetable oil prices tumbled. Futures lost 19 percent from a record $16.3675 on July 3.

Vegetable Oil

Palm oil in Kuala Lumpur plunged as much as 6.3 percent as supplies exceed demand for cooking oil and biofuel. Soybean oil in Dalian fell as much as its 5 percent daily limit, while Chicago soybean oil for December delivery fell as much as 2.9 percent to 53.65 cents a pound before trading at 53.98 cents.

Palm oil must decline to 2,200 ringgit ($648) a ton in the next few weeks for demand to rebound, Dorab Mistry, director at Godrej International Ltd., said yesterday.

Soybean oil is traded at an ``unsustainable premium'' to palm oil. The commodity, palm oil's main competitor, needs to decline substantially from current levels, Mistry said. Soybean oil was 46 percent more expensive than palm oil on July 28, the most in two years.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net