Wheat Futures Decline for Second Day as Investors Cash in Gains From Rally

Wheat futures declined a second day as investors locked in gains after Russia, the world’s third- largest grower last year, banned exports amid the worst drought in at least half a century.

December-delivery wheat fell as much as 1.6 percent to $7.225 a bushel on the Chicago Board of Trade, and was at $7.2775 at 10:30 a.m. Singapore time.

Hedge-fund managers and other large speculators increased net-long positions in Chicago wheat futures, the difference between bets on price gains and declines, by 31 percent or 6,415 contracts in the week ended Aug. 10, according to U.S. Commodity Futures Trading Commission data.

“Profit-taking helped pull the market off its highs,” Commonwealth Bank of Australia said in a report e-mailed today. Still, concerns about “declining global wheat supplies” and winter-wheat planting prospects in Russia and the rest of the former Soviet Union linger, it said.

Russia’s total grain harvest may drop to a range of 60 million to 65 million metric tons, compared with 97.1 million tons last year, according to the government. The nation’s wheat harvest may fall to 45 million tons, from 61.7 million tons a year earlier because of the drought, the U.S. Department of Agriculture said Aug. 12.

Farmers will sow 12 million hectares (30 million acres) of winter grain this year, compared with about 18.5 million hectares in each of the last two years, First Deputy Prime Minister Viktor Zubkov said Aug. 13.

The Russian government said last week it will maintain plans to halt grain exports from Aug. 15 through December, rejecting calls from farmers, exporters and millers to delay the ban until September.

U.S. Bottlenecks

The U.S., the world’s largest wheat exporter, may experience bottlenecks on railroads and at grain elevators as shipments surge following a drought in Russia, analysts at AgResource Co. and Linn Group said.

U.S. wheat exports will jump to 33 million tons in the crop year that began June 1, from 24.2 million, the USDA said Aug. 12.

Flooding in Pakistan may have damaged or destroyed between 500,000 and 600,000 tons of wheat stored on farms, “disrupting food availability in rural families,” the United Nations’ Food and Agriculture Organization said Aug. 13. Pakistan is the second-largest grower in South Asia, according to the USDA.

The floods may hinder Pakistan’s planting for the 2010-2011 winter-crop season starting in October and November because of a loss of seeds and other farm inputs, the FAO said.

Corn for December delivery was little changed at $4.2775 a bushel in Chicago, after three days of gains.

Some of Russia’s top corn consumers are planning to import the grain from countries including the U.S., the U.S. Grains Council said.

“While the price of grain in Russia is high, it is expected to go higher, so no one is selling,” Alex Kholopov, a consultant at the council, said on its website. “This leaves many Russian animal farmers in a panic and fearful of the situation.”

November-delivery soybeans were little changed at $10.4425 a bushel.