Told you so 
Wheat Drops on Speculation Demand for Animal Feed Will Decline
By Jeff Wilson
Aug. 4 (Bloomberg) -- Wheat fell to the lowest in two months on speculation that demand for the grain as an alternative livestock feed will slow after the price of corn plunged.
Wheat's premium to corn rose to more than $2 a bushel last week from 89 cents on July 7. Corn, the main ingredient in feed, dropped to the lowest price since March today and is down 30 percent from a record in June, as warm, wet weather revived Midwest crops. Rising supplies also are eroding the value of wheat. World production will rise 8.8 percent to a record this year, the U.S. Department of Agriculture said last month.
``The wheat-corn price spread is now showing a food premium for wheat, something we haven't seen in a long time,'' said Dave Marshall, a farm market adviser for Toay Commodity Futures Group LLC in Nashville, Illinois. ``There was no reason for the sharp rise in wheat prices over corn because more will be needed for livestock feed.''
Wheat futures for September delivery declined 35.25 cents, or 4.4 percent, to $7.5875 a bushel on the Chicago Board of Trade, the biggest percentage drop since July 7. The price earlier reached $7.52, the lowest for a most-active contract since June 4. The most-active futures reached a record $13.495 on Feb. 27.
Prices also fell after September futures slipped below last week's low at $7.7775, triggering selling from traders with pre- set orders to liquidate bets on higher prices, Marshall said. The next support for the contract is seen at the May 29 low of $7.465, he said.
Speculator Holdings
Hedge-fund managers and other large speculators reduced net-long positions in Chicago wheat futures in the week ended July 29, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, exceeded short positions by 2,067 contracts in Chicago, the Washington-based commission said in a Aug. 1 report. Three weeks earlier, they were net short 6,193, the most since April 2007.
``The break below last week's lows triggered today's collapse in prices,'' Marshall said. ``The perception is there will be an adequate supply of wheat'' to meet both food and feed demand this year, Marshall said.
Wheat Drops on Speculation Demand for Animal Feed Will Decline
By Jeff Wilson
Aug. 4 (Bloomberg) -- Wheat fell to the lowest in two months on speculation that demand for the grain as an alternative livestock feed will slow after the price of corn plunged.
Wheat's premium to corn rose to more than $2 a bushel last week from 89 cents on July 7. Corn, the main ingredient in feed, dropped to the lowest price since March today and is down 30 percent from a record in June, as warm, wet weather revived Midwest crops. Rising supplies also are eroding the value of wheat. World production will rise 8.8 percent to a record this year, the U.S. Department of Agriculture said last month.
``The wheat-corn price spread is now showing a food premium for wheat, something we haven't seen in a long time,'' said Dave Marshall, a farm market adviser for Toay Commodity Futures Group LLC in Nashville, Illinois. ``There was no reason for the sharp rise in wheat prices over corn because more will be needed for livestock feed.''
Wheat futures for September delivery declined 35.25 cents, or 4.4 percent, to $7.5875 a bushel on the Chicago Board of Trade, the biggest percentage drop since July 7. The price earlier reached $7.52, the lowest for a most-active contract since June 4. The most-active futures reached a record $13.495 on Feb. 27.
Prices also fell after September futures slipped below last week's low at $7.7775, triggering selling from traders with pre- set orders to liquidate bets on higher prices, Marshall said. The next support for the contract is seen at the May 29 low of $7.465, he said.
Speculator Holdings
Hedge-fund managers and other large speculators reduced net-long positions in Chicago wheat futures in the week ended July 29, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, exceeded short positions by 2,067 contracts in Chicago, the Washington-based commission said in a Aug. 1 report. Three weeks earlier, they were net short 6,193, the most since April 2007.
``The break below last week's lows triggered today's collapse in prices,'' Marshall said. ``The perception is there will be an adequate supply of wheat'' to meet both food and feed demand this year, Marshall said.
