Wheat farmers in record yield

Washington. — Wheat farmers are harvesting a record crop for the fourth time in six years, adding to a global grain glut and cutting costs for food makers. Production will jump 7,7 percent to 711 million metric tonnes in the year ending May 30, the biggest expansion since 2009, the World Trade Organisation last week. Reserves before next year’s harvest will increase 2,5 percent, implying a surplus, according to the average of 20 analyst estimates compiled by Bloomberg.

Societe Generale SA predicts Chicago futures will drop 6,3 percent to US$6,10 a bushel by the second quarter.

Canada, Australia and Russia, the largest exporters after the US, increased their estimates for harvests this month. Wheat will join an expanding global agricultural glut as farmers reap record corn, soyabean and rice crops.

The International Grains Council said last week that output will keep rising through 2019. Cereal costs tracked by the United Nations fell 24 percent in the past year, more than any food group.

“Supply security is much improved,” said Dan Basse, the Chicago-based president of AgResource Co, a research company.

“There is plenty of supply and world food prices should remain subdued for the next three to five years with normal weather.”

Wheat tumbled 16 percent to US$6,51 on the Chicago Board of Trade this year. It is the third-worst performer after corn and coffee among the eight commodities in the Standard & Poor’s Agriculture Index, which fell 19,5 percent and is heading for the biggest annual drop since 2008. The MSCI All-Country World Index of equities advanced 18 percent and the Bloomberg Treasury Bond Index lost 2,7 percent.

Inventories of wheat and feed grains including maize will climb to a four-year high of 379 million tonnes before the start of the 2014 harvest, 12 percent more than this year, according to the International Grains Council in London.

Australia, last year’s second-biggest wheat exporter, said the current crop will be the third-largest ever. Farmers may reap 26,2 million tonnes, 16 percent more than the 22,5 million collected a year earlier, the Australia Bureau of Agricultural and Resource Economics and Sciences said. It raised the forecast by about 7 percent.

Canada, the third-largest exporter, boosted its forecast a record 37,5 million tonnes, 38 percent more than a year earlier. Farmers finished seeding most of the crop by mid-June and an extended growing season boosted yields, Statistics Canada said.

Russian farmers collected about 54,1 million tonnes this year, up from last year’s crop of 39,7 million, the agriculture ministry said. The government estimated 53,7 million tones.

Increasing global supplies will pressure crop prices through the end of the year, HSBC Holdings Plc said.

Lower prices may cut the world’s food-import bill by 3,2 percent to US$1,15 trillion this year, according to the United Nations Food and Agriculture Organisation.

Global food costs tracked by the Rome-based group fell 13 percent since reaching a record in February 2011.

Even as global supplies increase, stockpiles are dropping in the US, where fields are still recovering from a 2012 drought that was the worst since the 1930s. Inventories before next year’s harvest will drop to 547 million bushels (14,9 million tonnes), 24 percent less than a year earlier, according to a Bloomberg survey of 29 analysts. — Bloomberg.