Wheat Jumps to Highest Since 2008 as Global Droughts Erode Crops
Wheat futures jumped to the highest in almost four years as the worst drought since 1956 erodes crop prospects in the U.S. and dry weather hurts production in Australia and Russia.
Little rain will fall during the next seven to 10 days in the northern Great Plains of the U.S., the world’s biggest wheat exporter, forecaster Telvent DTN said in a report. Australia will be drier-than-normal for the next three months, the Bureau of Meteorology said. Russian farmers will collect 46.5 million metric tons of the grain in the year that began July 1, down 4.1 percent from 2011, researcher SovEcon said.
“Look at what’s going on in the U.S. and look at what’s going on in Australia and Russia, and people are looking at drawing down world carryout,” Mike O’Dea, a risk management consultant at INTL FCStone in Kansas City, Missouri, said by telephone today. “There are a lot of people talking up wheat right now.”
Wheat futures for September delivery rose 3.5 percent to settle at $9.35 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $9.38, the highest for a most-active contract since Aug. 21, 2008. Prices have surged 49 percent since mid-June.
Farmers in Argentina will reduce wheat planting by 22 percent in the 2012-2013 crop year, the Rosario Cereals Exchange said yesterday. Australia is the second-biggest exporter, followed by Canada, Russia, Kazakhstan and Argentina, according to the U.S. Department of Agriculture.
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
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