Wheat Climbs on Speculation Adverse Weather to Hurt Australian, U.S. Crops

Wheat rose in Chicago on speculation rains in Australia will hurt the harvest in the fourth-largest exporter of the grain and dry weather in the U.S. will curb output.

Showers and thunderstorms are likely from southeastern parts of South Australia into Victoria and eastern parts of New South Wales and Queensland in the next few days, Accuweather.com said in a forecast yesterday. A “moderate drought” is harming plants in Kansas, the biggest U.S. producer of winter wheat, according to data from the University of Nebraska in Lincoln.

“Rains in eastern Australia are threatening to produce a soggy crop,” said Justine White, an analyst at VM Group in London. “The harvest is already running late, and if the rains persist, this will increase the proportion of grain downgraded to feed wheat.”

Wheat for March delivery gained 23.75 cents, or 3.4 percent, to $7.1425 a bushel at 1:14 p.m. London time on the Chicago Board of Trade. The grain reached $7.20, the highest level in more than two weeks, and has added 4.9 percent since Nov. 23, the last time prices declined. The U.S. is the biggest wheat exporter.

“Canada is also anticipated to have a higher-than-normal share of the wheat crop relegated to feed wheat,” White said. “This shortage of quality wheat from major exporters will increase demand for U.S. exports, but conditions there have also been less than ideal. The plains have reportedly been abnormally dry at a time when the crop needs to settle in before the harsh winter weather takes hold.”

Australian Crop

The wheat harvest in Australia is forecast at 23.19 million metric tons this season, unchanged from a July estimate, the Foreign Agricultural Service of the U.S. Department of Agriculture said last month. That compares with the Australian Bureau of Agricultural and Resource Economics-Bureau of Rural Sciences forecast of 25.1 million tons in 2010-2011 on Sept. 14.

“Rain persists in Australia, and little improvement is expected this week, therefore continuing to reduce the quality of the harvests, which are already a month behind schedule,” Paris-based farm adviser Agritel said in a market comment today. “Conditions remain too dry for U.S. autumn plantings.”

Australia likely will produce less wheat than expected, Jonathan Barratt, managing director at Commodity Broking Services Pty, said by phone from Sydney.

Milling wheat for January delivery traded on NYSE Liffe in Paris climbed 1.4 percent to 227.25 euros ($298.38) a ton.

Soybeans Climb

Corn for March delivery rose 8.5 cents, or 1.6 percent, to $5.525 a bushel in Chicago. Soybeans for January delivery added 18.25 cents, or 1.5 percent, to $12.6125 a bushel.

Rice gained as import demand grows amid declining output. The United Nations’ Food and Agriculture Organization cut its global output estimate for the grain for a third time since April as floods and drought slashed harvests around Asia.

Rough-rice production may total 697.9 million tons, or 465.4 million tons of milled grain, below the 704.4 million tons estimated in June, the FAO said in a report yesterday.

Rice for January delivery rose 15 cents, or 1.1 percent, to $14.03 per 100 pounds after adding 3.4 percent yesterday.

Bangladesh, South Asia’s biggest rice importer, plans to more than double overseas purchases to 600,000 tons in the year that began July 1, Badrul Hasan, director for procurement at the Directorate General of Food, said by phone yesterday.

Higher import demand combined with production concerns will push rice prices higher, Barratt of Commodity Broking said.

“There are some very solid fundamentals which are supporting rice at the moment,” he said.

To contact the reporters on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net.

To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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