Wheat Surges as `Panic Brewing' on Australian Crop Amid Rising Global Use

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. Rice futures rose the most since August.

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.

Wheat futures for March delivery jumped 49.5 cents, or 7.2 percent, to settle at $7.40 a bushel at 1:15 p.m. on the Chicago Board of Trade. That marked the biggest gain for a most-active contract since Oct. 8. Earlier, the commodity reached $7.45, the highest since Nov. 12.

Wheat has surged 54 percent since the end of June as drought in Russia and floods in Canada cut global supplies. Dry weather in the U.S. Great Plains has threatened winter crops.

Egyptian Demand

Shrinking world supplies of milling-quality wheat may be spurring demand from Egypt, the biggest importer, said Austin Damiani, a floor broker at the Minneapolis Grain Exchange. Egypt said today it bought 220,000 metric tons in a tender from the U.S.

“We’ve seen deteriorating quality of the crops in Australia,” said Damiani, who works for Frontier Futures Inc. “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.”

The U.S. is the world’s largest exporter, followed by France and Canada, according to data from the International Grains Council and FranceAgriMer.

Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.

Rice futures for January delivery climbed 49.5 cents, or 3.6 percent, to $14.375 per 100 pounds, the biggest gain since Aug. 23.

Earlier, the price reached $14.38, the highest since Nov. 12.

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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