The Thomson Reuters/Jefferies CRB Index of 19 raw materials tumbled to a nine-month low and global equities dropped after the Federal Reserve said that the U.S. economy faces “significant downside risks.” More Americans than forecast filed first-time claims for unemployment insurance last week, the Labor Department said today. China’s manufacturing may drop this month, a preliminary index of purchasing managers showed.
Wheat is “being caught in the swing to the downside due to concerns in the financial markets,” Tom Leffler, the owner of Leffler Commodities LLC, said by telephone from Augusta, Kansas. “There is a huge lack of confidence out there, not only in the U.S.”
Wheat futures for December delivery dropped 33 cents, or 4.9 percent, to settle at $6.3375 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest drop since June 30. Earlier, the price touched $6.3225, the lowest for a most-active contract since July 12. The commodity has slumped 20 percent this month.
Prospects for increasing world output also pressured futures. Farmers worldwide may harvest 678.9 million metric tons of wheat this year, the International Grains Council said today, above last month’s estimate of 677.1 million tons.
Egypt, the world’s biggest wheat importer, bought 240,000 tons from Russia in a tender today, shunning U.S. supplies. Russia, once the second-largest exporter, lifted a ban on shipments July 1 following drought last year.
“The Black Sea region continues to export wheat at a crazy rate,” Leffler said. “It’s not good for our wheat prices.”
Wheat is the fourth-largest U.S. crop, valued at $13 billion in 2010, behind corn, soybeans and hay, government data show. The U.S. is the world’s biggest exporter.