Wheat Futures Advance, Erasing Losses, as Russia Lowers Harvest Estimate

(Corrects headline to show wheat prices gained.)

Wheat futures advanced, reversing earlier losses after Russia lowered its grain harvest estimate and rejected calls for a delay in the export ban.

December-delivery futures added as much as 0.9 percent to $7.4075 a bushel on the Chicago Board of Trade, erasing a loss of 1.6 percent earlier. The contract traded at $7.375 a bushel at 3:02 p.m. Singapore time.

Farmers in Russia, the world’s third-largest grower last year, will sow 12 million hectares (30 million acres) of winter grains 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. Concerns about “declining global wheat supplies” and winter-wheat planting prospects in Russia and the rest of the former Soviet Union linger, Commonwealth Bank of Australia said in a report e-mailed today.

Russia’s total grain harvest may decline to a range of 60 million to 65 million metric tons, compared with 97.1 million tons last year, according to the government. Wheat production may fall to 45 million tons, from 61.7 million tons a year ago, the U.S. Department of Agriculture said Aug. 12.

Russia’s government said last week it will maintain plans to halt grain exports from Aug. 15 through year-end, rejecting calls from farmers, exporters and millers to delay the ban until September.

U.S. Bottlenecks

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

Floods 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. The country 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.

Wheat futures fell earlier today on speculation investors may be locking in gains after a recent rally. Prices have surged 54 percent since June 30, as drought in Russia and Ukraine and other parts of Europe and excessive rains in Canada curb supply.

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

December-delivery corn added as much as 0.3 percent to $4.285 a bushel before trading at $4.2775 a bushel at 2 p.m. Singapore time.

Russian Corn

Some of Russia’s biggest corn users plan to buy 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.”

Corn for January delivery in Dalian climbed as much as 1.5 percent to 2,001 yuan ($294) a ton, a record for the most-active contract, after the government reduced stockpile sales, boosting speculation domestic inventories are dwindling. The contract traded at 1,998 yuan at 1:49 p.m. local time.

Dalian futures have surged about 16 percent in the past year as drought reduced output in major northeast producer regions including Jilin and Heilongjiang.

November-delivery soybeans added 0.1 percent to $10.455 a bushel on the Chicago Board of Trade.