Wheat Slides Below $5 As USDA Lifts Domestic Output Forecast

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Wheat futures are sliding in the middle of the trading week after the US government lifted its forecast for domestic production in the 2020-2021 marketing season. The agricultural commodity has had a rough 2020, despite a slight bump at the end of March. With ample supplies and ballooning output, wheat prices are likely to end the year in the red.

September wheat futures tumbled $0.0325, or 0.66%, to $4.9175 per bushel at 17:46 GMT on Wednesday on the Chicago Board of Trade (CBoT). Wheat prices have slumped more than 3% this week, bringing their year-to-date declines to more than 12%.

On Wednesday, the US Department of Agriculture (USDA) released its monthly World Agricultural Supply and Demand Estimates report. The USDA increased its estimates for domestic wheat and corn production for the upcoming marketing year.

According to the USDA, domestic wheat production will increase by approximately 14 million bushels to 1.8 billion bushels. It also cut its projections for imports by ten million bushels in August to 130 million bushels. US wheat ending stock expectations were reduced by 17 million bushels to 925 million, which would be the lowest in six years.

Corn output, meanwhile, is anticipated to come in at 15.3 billion bushels, up 278 million from the July estimates. Corn yields could hit a record high of 181.8 bushels per acre, which is about in line with market forecasts.

In other industry news, Canada is on track for its largest wheat crop in history, while Ukraine’s wheat exports are holding steady.

The drop in agricultural commodities was capped by a lower greenback. The US Dollar Index, which gauges the buck against a basket of currencies, slumped 0.25% to 93.40, from an opening of 93.68. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

In other commodity markets, September corn futures edged up $0.0075, or 0.24%, to $3.1225 per pound. November soybean futures rose $0.07, or 0.8%, to $8.8025 a bushel. September coffee futures dipped $0.0025, or 0.22%, to $1.118 per pound.

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