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U.S. Commodities: Wheat Jumps as ‘Panic Brewing’ on Supplies

Wheat prices jumped the most in seven weeks as excessive rainfall threatened to reduce grain quality and delay the harvest in Australia, the world’s fourth-largest exporter.

Areas of New South Wales, the biggest wheat-producing state, got more than 5 centimeters (2 inches) of rain in the past 24 hours, according to data from Australia’s Bureau of Meteorology. The three months ended Nov. 30 were the country’s wettest on record, the agency said. The harvest may be four weeks behind normal, said GrainCorp Ltd., the top bulk-wheat handler in the eastern region.

“There is continued wet weather in eastern Australia during the harvest, and forecasts are adding additional precipitation out for the next two weeks,” said Jim Hemminger, a risk-management specialist at Top Third Ag Marketing in Chicago. “Because of the adverse weather, the quality is going to be poor, so it may become feed” for livestock, he said.

In other markets, corn futures jumped the most in six weeks and soybeans rose to a two-week high on speculation that China will boost imports to slow domestic food-price inflation. Crude oil also climbed. The UBS Bloomberg Constant Maturity Commodity Index advanced 2.7 percent, the most in seven weeks, to 1,530.56.

Wheat futures for March delivery jumped 49.5 cents, or 7.2 percent, to settle at $7.40 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since Oct. 8.

Egypt, the biggest importer, said today it bought 220,000 metric tons in a tender from the U.S.

“There’s a little bit of a panic brewing, and I think the Egyptian tender is a testament that end-users are short high- quality wheat,” said Austin Damiani, a floor broker at the Minneapolis Grain Exchange for Frontier Futures Inc.

Corn, Soybeans

Corn futures for March delivery rose 22.25 cents, or 4.1 percent, to close at $5.6625 a bushel on the Chicago Board of Trade, the biggest gain since Oct. 20. In November, the price fell 6.5 percent, the first drop since May.

Soybean futures for January delivery rose 40 cents, or 3.2 percent, to $12.83 a bushel. Earlier, the price reached $12.84, the highest since Nov. 16. The commodity climbed to a 26-month high of $13.485 on Nov. 12.

Argentina expects China to agree on buying corn in the first half of 2011, Minister of Agriculture Julian Dominguez said. China normalized soybean-oil trade between the nations, and the first shipment is expected to arrive in December or January, Dominguez said. The Asian nation is the second-biggest producer of corn and the largest importer of soybeans and cooking oils.

“Chinese demand should increase,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “The deals are just another sign that supplies of food in China are getting tight.”

Crude Oil

Crude rose to the highest level in almost three weeks on greater-than-forecast growth in U.S. private employment and Chinese manufacturing.

Prices surged 3.1 percent as companies in the U.S. boosted payrolls the most since November 2007, according to figures from ADP Employer Services. Chinese manufacturing expanded at the fastest rate in seven months. Futures reached the day’s high after Goldman, Sachs & Co. said oil will average $110 a barrel in 2012, up from a forecast $100 a barrel next year.

“As the global economy goes, so goes oil,” said Andre Julian, the chief financial officer and senior market strategist at OpVest Wealth Management in Irvine, California. “The economic numbers in China and elsewhere today have been very strong and point to accelerating growth.”

Oil futures for January delivery increased $2.64 to $86.75 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 11.

Commodities settled as follows:

Precious metals: February gold up $2.20 to $1,388.30 an ounce March silver up 20.1 cents to $28.413 an ounce January platinum up $17.60 to $1,684 an ounce March palladium up $29.30 to $732.30 an ounce

Livestock: February live cattle up 0.4 cent to $1.06775 a pound January feeder cattle down 0.775 cent to $1.184 a pound February lean hogs down 0.525 cent to 75.25 cents a pound February pork bellies unchanged at $1.045 a pound

Grains: January soybeans up 40 cents to $12.83 a bushel March corn up 22.25 cents to $5.6625 a bushel March wheat up 49.5 cents to $7.40 a bushel March oats up 13 cents to $3.63 a bushel

Food and Fiber: March coffee up 2.35 cents to $2.0355 a pound March cocoa down $49 to $2,758 a metric ton March cotton up 4 cents to 121.34 cents a pound March sugar up 0.82 cent to 28.37 cents a pound January orange juice up 3.55 cents to $1.5275 a pound

Energy: January crude oil up $2.64 to $86.75 a barrel January natural gas up 8.9 cents to $4.269 per million British thermal units January heating oil up 8.12 cents to $2.4056 a gallon January gasoline up 11.36 cents to $2.3004 a gallon

Others: March copper up 12.2 cents to $3.9475 a pound January lumber up $4 to $251 per 1,000 board feet

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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