Wheat prices fell to a two-week low after the government unexpectedly raised its estimate for U.S. stockpiles, because less of the harvested grain will be used to seed new crops after harvest delays for corn and soybeans.

 

About 603 million bushels will be in storage by May 31, 2009, almost double a 34-year low of 306 million a year earlier, the U.S. Department of Agriculture said in a report. Last month, the USDA forecast 601 million and analysts expected 589 million on average, a Bloomberg survey showed. Wheat prices are down 61 percent from a record in February as the farmers planted more.

 

``The thing that stands out is carryout stocks,'' said Jason Britt, president of Central States Commodities Inc. in Kansas City, Missouri. ``Higher prices accomplished what we wanted, and we have more wheat.''

 

Wheat futures for December delivery fell 1 cent, or 0.2 percent, to $5.20 a bushel on the Chicago Board of Trade. The price earlier fell to $5.0525, the lowest since Oct. 27. It reached a record $13.495 on Feb. 27.

 

Some U.S. growers who normally seed wheat after harvesting corn and soybeans won't be able to plant winter varieties this year, lowering the usage of seed wheat and boosting supplies.

 

Farmers will use 82 million bushels of wheat from storage to seed new crops, less than the 84 million forecast last month, increasing U.S. stockpiles by 2 million bushels from the October estimate, the USDA said. About 260 million bushels will be used for feed, unchanged from last month's forecast, the USDA said. Analysts had expected an increase in feed usage.

 

``Feeders will always go to corn over wheat if prices are competitive,'' Britt said.

 

Delayed Harvests

 

Corn and soybean harvests were delayed as wet weather slowed planting and rain fell when growers were trying to collect their crops. About 55 percent of U.S. corn was harvested as of Nov. 2, less than the 83 percent of the prior year, the government said. About 86 percent of soybeans were collected, compared with 90 percent a year earlier.

 

Wheat prices also may be declining after the government raised its global production estimate by 3.2 percent to a record 682.4 million metric tons. Russia will harvest 63 million tons, up from 61 million forecast last month, and 12 former Soviet republics will increase production by 2 million tons, the USDA said in today's report.

 

``Price usually turns out to be the best fertilizer,'' Britt said. ``Never underestimate the abilities of the U.S. farmer. And there are increases around the world. As a whole, world wheat stocks are up.''

 

Demand has waned as overseas buyers shunned U.S. supplies, in some cases opting for wheat from Russia or Ukraine to save on shipping costs, analysts said. The USDA inspected 12.8 million bushels of wheat in the week ended Nov. 6, down 9.5 percent from the prior week and 47 percent less than the same time a year earlier, the government said in a report today.

 

Wheat is the fourth-biggest U.S. crop, valued at $13.7 billion in 2007, behind corn, soybeans and hay, government data show.