Washington/Chicago: The global wheat glut that’s kept prices trapped in a bear market is showing signs of easing after poor weather reduced harvest expectations in India and Australia.

World inventories will be 2.376 crore metric tons, down from 2.389 crore tons estimated in February, the US department of agriculture said on Wednesday in Washington. The crop in India, the world’s biggest grower after China, will be 8.653 crore tons, down from last month’s forecast of 8.894 crore, the agency said. Wheat futures rose after the report.

While the figures show some relief from overwhelming supplies, the world is still saddled with large stockpiles. Wheat prices in Chicago are heading for a third straight quarterly slump, the longest skid since 2013. American farmers, coping with a stronger dollar, are having an even harder time finding buyers for their relatively expensive supplies. Ballooning inventories have pushed world food costs lower as declines in commodities help keep a lid on inflation.

“We still have too much grain in the world, and the US is the least competitive exporter," Don Roose, the president of US Commodities Inc. In West Des Moines, Iowa, said in a telephone interview.

Wheat futures for May delivery added 0.6% to close at $4.6825 a bushel on the Chicago Board of Trade, capping the first six-day gain since 14 December 2014. Corn futures for May delivery fell 0.3% to close at $3.595 a bushel in Chicago, while soybean futures for delivery in the same month gained 0.1% to $8.8575 a bushel.

Price rally

Even with a looming glut, there’s some hope for bullish investors as concerns over dry weather increase speculation that this year’s harvests could be smaller than expected. Prices in Chicago rose in the previous five sessions, the longest rally in a year. An El Niño weather pattern has disrupted India’s monsoon season and caused droughts that have reduced harvests in parts of Southeast Asia and Africa.

Australia, the fourth-biggest exporter of the grain, will harvest 2.45 crore tons, a reduction from last month’s estimated 26 million tons, the USDA said.

In the same report, the USDA left its forecasts for US corn and wheat production and inventories unchanged, while increasing its soybean stockpiles forecast on reduced crushing of the oilseed.

The department unexpectedly reduced its forecast for global corn and soybean inventories. Corn stockpiles fell on a lower production forecast for South Africa and on revisions to the USDA’s estimate for Brazil’s inventories coming into the current marketing year.

The estimate for global soybean stockpiles was cut as use increased in China, the world’s biggest buyer. Domestic crush of the oilseed may be 8.18 crore tons, up from 8.07 crore estimated last month, while imports will be 8.2 crore tons, up from 8.05 crore, the department said. Bloomberg