Wheat futures slump to 1-week low on Australia crop outlook

Forexpros - Wheat futures declined on Thursday, trading at a one-week low after Australia forecast a record high wheat crop, adding to worries over increasing competition for U.S. wheat exports.On the Chicago Mercantile Exchange, wheat futures for March delivery traded at USD5.9538 a bushel during European morning trade, dropping 0.85%. It earlier fell by as much as 1.05% to trade at USD5.9412 a bushel, the lowest since November 29, when prices fell to USD5.9112. Wheat futures continued their recent run of losses after the Australian Bureau of Agricultural and Resource Economics said that it expected the nation's wheat output to rise to an all-time high of 28.28 million tonnes in the 2011-12 marketing season, up 8% from its September forecast and 7% higher than a year earlier.Wheat production in Western Australia, the country's largest wheat growing state, is forecast to more than double in 2011-12 to about 10.1 million tonnes.The bureau projected total Australian wheat exports to rise to a record 21.6 million tonnes in the marketing year to September 30, 2012, up almost 6% from the preceding month's forecast. "Rainfall in South Australia, Victoria and southern New South Wales during late winter and spring was generally favorable and is forecast to result in above average yields," ABARES said in a statementAustralia is the world's fourth largest wheat exporter. A favorable export outlook for the Pacific nation could result in reduced demand for U.S. supplies, which is the world's third largest wheat producer and biggest exporter.Agribusiness financial service provider Rabobank said that it expected wheat prices to remain under pressure in the near term, citing ample global supplies.'Although high-protein and high-quality supplies are less abundant, there will be ample supplies to meet global demand needs in the season ahead,' the lender said in a report earlier.Traders have been focusing on demand issues in recent sessions because the U.S. wheat harvest was in its finishing stages. Meanwhile, agricultural commodity traders awaited the outcome of the European Central Bank's policy meeting later in the day, at which it was expected to announce a 0.25% interest rate cut, bringing the rate to a record low 1%.Also Thursday, European leaders were to begin a two-day summit in Brussels to discuss proposed changes to EU treaties which would allow for greater fiscal integration and stricter enforcement of budgetary discipline in the single currency bloc.Elsewhere on the Chicago Mercantile Exchange, corn for March delivery retreated 0.8% to trade at USD5.8788 a bushel, while soybeans for January delivery dipped 0.22% to trade at USD11.2850 a bushel.
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