Agriculture Market Outlook 2011: Wheat Future Prices Fall

Wheat futures fell the most in six weeks on speculation that snow in the U.S. Great Plains will improve soil moisture and provide protective cover over crops before temperatures drop.

Areas of northwest Kansas may receive up to 6 inches (15 centimeters) of snow by tomorrow, while southwest to north- central Nebraska may get up to 8 inches, according to National Weather Service forecasts. Much of the area has had less than half of the normal amount of precipitation in the past 60 days. Temperatures may drop to minus 10 Fahrenheit (minus 23 Celsius), according to World Weather Inc.

The storm ?probably will provide some snow cover before the cold weather comes across,? said Louise Gartner, the owner of Spectrum Commodities in Beavercreek, Ohio.

Wheat futures for March delivery fell 19 cents, or 2.4 percent, to $7.8025 a bushel at 10:30 a.m. on the Chicago Board of Trade. A close at that price would be the biggest decline since Nov. 16.

Before today, prices jumped 48 percent this year as adverse weather cut production in Russia and threatened crops in Australia and the U.S.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

With prices high and exports strong, the outlook for Montana's wheat harvest is golden.

Lola Raska of the Montana Grain Growers Association says people in the industry were in a good mood as the state's largest grain group wrapped up its convention in Great Falls last week.

Cash prices for wheat have ranged from $6.49 a bushel for ordinary winter wheat to $10.15 for high-protein spring wheat. Six months ago, the average price was less than $5 a bushel.

Russia and Ukraine has suspended grain exports because of drought and Australia finished the year reporting a 1 million ton cut in wheat exports.

Montana wheat farms have produced 215.36 million bushels of wheat this year, despite planting 80,000 fewer acres than the year before, according to the National Agricultural Statistics Service.

Chicago wheat futures rallied from a 2-week low as Russia extend bans on grain exports while corn and soybeans continue their falling trend amid stronger U.S. dollar and favorable weather.

The most active wheat contract for December delivery gained two cents, or 1.2 percent, to 6.7075 U.S. dollars per bushel. December corn slid 4.15 cents, or 0.8 percent, to 5.6 dollars per bushel. November soybean shed two cents, or 0.17 percent, to 11.995 dollars per bushel.

Russia, one of the worlds'largest wheat exporters, extended its export ban on grain to July 1, 2011, Prime Minister Vladimir Putin said on Friday, which has triggered robust rally in the wheat market.

The country said in August it would halt exports until the end of this year due to reduced grain production amid severe drought, which pushed the wheat market on the hiking track. The wheat price has surged around 40 dollars since the end of July.