Wheat Prices Rise on Improved Demand Prospects in U.S. for Livestock Feed
Wheat rose for the first time in three sessions on speculation that more of the grain will be used as a substitute for higher-priced corn in livestock feed.
Corn prices may rally faster than wheat in coming weeks, said Rich Feltes, the director of commodity research for MF Global Holdings Ltd. in Chicago. Corn yields may be limited by temperatures expected to reach 96 degrees Fahrenheit (36 Celsius) next week in Iowa and Illinois, the largest producers of corn. Wheat’s gains may be limited by winter-crop yields that are better than expected in parts of Kansas.
“There’s uncertainty regarding the U.S. corn crop,” said Rich Feltes, the director of commodity research for MF Global Holdings Ltd. in Chicago. “The long-term weather is questionable with hot weather the next couple weeks and a more scattered precipitation pattern. You have to view wheat in terms of a backstop to corn as a feed ingredient.”
Wheat futures for September delivery advanced 13.5 cents, or 2.5 percent, to $5.4925 a bushel on the Chicago Board of Trade. The price has gained 14 percent in July, partly as hot weather hurt crops in Russia and France.
Corn futures are up 5.4 percent this month.
Wheat also may have gained on speculation that hot weather will further lower yields in parts of Russia. Dry weather will persist through July 17, the country’s weather center said today. Temperatures are expected to rise to 38 degrees Celsius (100 Fahrenheit), the Federal Hydrometeorological Service said on its website today.
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.
To contact the reporter on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net.
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