Sept. 29 (Bloomberg) -- Wheat futures in Chicago rose the most in a week on speculation unusually dry weather in Russia and Ukraine will damage crops and increase demand for U.S. grain.

It hasn't rained in much of southwestern Russia and eastern Ukraine in three weeks, and there's no rain expected for the next 10 days, said Drew Lerner, president of World Weather Inc. in Kansas City, Kansas. Rains are needed soon for recently planted seeds to develop root systems to survive the winter, Lerner said.

``Dryness in Russia and Ukraine could change the complexion of the global wheat supply,'' said Allen Dever, an analyst for Doane Agricultural Services Inc. in St. Louis. ``If production is curtailed, it could boost demand for U.S. wheat.''

Wheat futures for December delivery rose 4 cents, or 1.2 percent, to $3.3275 on the Chicago Board of Trade, the biggest increase for the most-active futures since Sept. 22. Prices have risen 4.8 percent since closing at an 11-week low Aug. 31. A futures contract is an agreement to buy or sell a commodity at a specified price and date.

Prices are up 16 percent since falling to a 21-month low at $2.87 on Feb. 4 as dry weather damaged crops in Europe, China and Australia, cutting global production 2.2 percent to 610.3 metric million tons from a year ago, the U.S. Department of Agriculture said Sept. 12.

The former Soviet Union, once the largest buyer of U.S. wheat, accounted for 18 percent of global wheat exports last year after production of the grain rose 42 percent to 86.4 million tons.

Limited Growth Forecast

Further growth may be limited, the U.S. Wheat Associates said today in a newsletter. The area planted to wheat in both Russia and Ukraine may shrink as farmers shift to other, more profitable grains and oilseed crops, and yield advances may slow, the trade group said.

New capital investment has not been evident, with some farm machinery as much as 10 years old and much of the transportation and storage infrastructure dating back to before the fall of the Soviet Union in 1991, according to Valentine Shustova, the group's marketing specialist in Moscow.

Wheat exports from Russia, Ukraine and Kazakhstan will rise by a third to 20.2 million tons in the marketing year that ends May 30 from the previous year, the U.S. Department of Agriculture said Sept. 12. Exports rose 89 percent to a record 25.8 million tons three years ago before collapsing to 7.3 million in the marketing year that ended June 30 2004 after poor weather reduced production, according to the USDA.

Production in the twelve nations of the former Soviet Union will rise 7.9 percent to 92.6 million tons this year from last year, the department said.

``Some of the early-planted crop likely emerged favorably, but has run out of moisture to induce good tillering or to expand root systems,'' Lerner said. ``Crops that are not well established prior to dormancy run a higher risk of winterkill during periods of extreme winter weather.''

Wheat was the fourth biggest U.S. crop last year, valued at $7.2 billion, behind corn, soybeans and hay, according to government figures. The U.S. is the world's biggest exporter of the grain, while Russia and Ukraine are in fifth and sixth place, respectively.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

Last Updated: September 29, 2005 13:14 EDT