US wheat futures slid in on Tuesday, resuming trade after a long weekend during which Russia said it was ending its export ban and could ship up to 20 million tonnes of grain from this year's crop. Prime Minister Vladimir Putin announced at the weekend that the Russia, once the world's third-largest wheat exporter, would lift a grain export ban from July 1.
Chicago Board of Trade (CBOT) wheat for July delivery fell as low as $7.84 per bushel, down more than 4 percent from the last US close on Friday, before recovering to $7.99-3/4, down 2.44 percent by 1141 GMT. The CBOT was closed on Monday for Memorial Day.
The Russian Grain Union industry lobby said the country might export up to 20 million tonnes of grain from this year's crop if the harvest reached 85-90 million tonnes. "We expect there to be some recovery in the Black Ssea exportable surplus, although not to the levels seen in 2008 and 2009," said Chris Gadd of the Macquarie Capital.
"We predict Russia to have a domestic wheat surplus that will allow export of 7.1 million tonnes," he said in a report issued on Tuesday. Despite the fall, the market is on track for a monthlyy rise of more than 3 percent "We had a strong lead from French milling wheat futures while the United States was shut," said an agricultural commodity analyst at ANZ in Melbourne.
European wheat futures closed down 5 percent on Monday after Russia's announcement, but rebounded on Tuesday morning. The benchmark milling wheat on the Euronext exchange traded 2 euros up at 240.75 euros a tonne ahead of US Department of Agriculture data on Tuesday. Harsh weather conditions in the US wheat belt, Western Europe and Western Australia would support prices analysts said.
"Crop losses in France could be greater than 10 percent, above the working consensus that had been 5-10 percent." the ANZ analyst said. "There hasn't been much moisture across the French and German crop and while these issues are hanging around, prices will be supported." The US winter wheat crop and Western Australian crop - both key high-protein growing areas - were also at risk from dry weather.
China, the world's top wheat producer, is likely to reap a bumper wheat harvest in 2011 despite drought earlier this year in most of its wheat-growing areas in the north, the agriculture ministry said. Central areas of China were forecast to have heavy rains next week, which have helped drive down Chinas wheat and rice markets on Tuesday, by 0.7 and 1.4 percent respectively.
Some market watchers wondered if rains had come too late, which together with energy shortages and higher fuel and power prices could reduce the amount of land under irrigation and thus prevent China's crop meeting official expectations. Corn futures were marginally higher, supported by concerns about the slow pace of planting in North America.