Wheat rose for a second day on forecasts for declining global production caused by adverse weather in Russia and the European Union and on strong demand for grain from the U.S., the world’s largest exporter.
World output will total 644 million metric tons in the marketing year that ends in June, the International Grains Council said yesterday. That’s down 1.1 percent from a prior estimate. Exporters sold 3.8 million tons from U.S. inventories in the past three weeks, the most for a similar period in almost three years, government data show.
“The wheat market is still about the Russian rhetoric,” said Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas. “It’s not gotten better over there, but it’s not worse. The wheat market is like a car race. We go to a car race to see a crash. We’re watching the wheat market to see a crash. What’s the next bullish move that’s going to appear?”
Wheat futures for December delivery rose 6.5 cents, or 0.9 percent, to close at $6.95 a bushel at 1:15 p.m. on the Chicago Board of Trade. The grain dropped 2.4 percent this week, the third straight weekly decline.
The price has gained 45 percent since the end of June, the biggest gain among the 19 commodities tracked by the Reuters/Jefferies CRB Index. The rally was fueled by concern that global production would decline because of drought in Russia and dry weather followed by flooding in parts of Germany.
Rising Export Sales
Strong demand for stockpiles from the U.S. has helped boost prices. Overseas buyers committed to buy 13.1 million metric tons of wheat from the start of the marketing year on June 1 through Aug. 19, up 55 percent from the same period a year earlier, the USDA said in a report yesterday.
“Export sales have exceeded more than 1 million metric tons for three weeks, which is good news,” Leffler said. “The market is not paying attention to the positive news out there. We’ve shifted our focus to everything we can find that’s bullish.”
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.