Wheat Rallies as Russia Extends Ban; Mozambique Bread Prices Spark Rioting

Wheat rose to the highest level in three weeks on signs of increased demand for U.S. supplies as world inventories are forecast to fall for the first time in three years.

Wheat has soared 74 percent from a three-year low on June 9 as adverse weather hurt crops in Russia, Kazakhstan, the European Union and Canada. Russia will extend a grain-export ban until after the next harvest, Prime Minister Vladimir Putin said yesterday. The prospect of higher food prices have sparked riots in Mozambique.

“We continue to see good, strong export demand for U.S. wheat,” said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC in Chicago. “Rising prices has increased world concern about acquiring supplies.”

Wheat futures for December delivery rose 27.5 cents, or 3.9 percent, to close at $7.4125 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $7.42, the highest level for a most-active contract since Aug. 13. The grain jumped to $8.68 on Aug. 6, the highest level since August 2008.

Wheat, which surged 6.7 percent this week, was supported by reports of U.S. export sales. Shippers sold 110,000 metric tons of the grain to Egypt and 275,000 tons to unknown destinations, the Department of Agriculture said.

Food Riots

Rallies in wheat, corn, rice and livestock have increased concerns that a jump in food costs will spur unrest similar to 2008, when there were riots in countries including Haiti and Egypt.

In Mozambique, police said more than 50 people were arrested in the central city of Chimoio after demonstrators blocked roads to protest increases in food costs. At least seven people have been killed in clashes with police in Maputo, the capital of the southern African nation, Cabinet spokesman Alberto Nkutumula said yesterday.

Global world inventories will fall to 174.8 million metric tons in the year ending May 31 from 194 million tons a year earlier, the USDA forecast last month. Stockpiles fell to 124.9 million tons in 2008, the lowest since 1982. Wheat futures in Chicago reached a record $13.495 a bushel on Feb. 27, 2008.

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: Jeff Wilson in Chicago at jwilson29@bloomberg.net

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