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Wheat Jumps to Four-Month High, Rice Gains Amid Threat to Crops

Dec. 2 (Bloomberg) -- Wheat rose to the highest price in almost four months and rice futures gained as wet weather from Australia to Thailand threatened to curb global grain supplies.

Areas of New South Wales, Australia’s biggest wheat-growing state, were under flood warnings today after the country’s wettest September-to-November period ever, the government’s Bureau of Meteorology said. Floods in Thailand, the world’s largest rice exporter, damaged crops, spurring speculation that global demand will climb for wheat as a food substitute.

“Weather is the issue,” said Darrell Holaday, the president of Advanced Market Concepts in Manhattan, Kansas. “If Australia wasn’t enough, and if the middle U.S. Plains wasn’t enough, let’s throw the Thailand rice issues with weather in there, too.”

Wheat futures for March delivery climbed 8.5 cents, or 1.1 percent, to settle at $7.485 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $7.675, the highest for a most-active contract since Aug. 9.

The commodity has jumped 56 percent since the end of June after drought in Russia and floods in Canada cut world output and dry weather in the U.S. Great Plains threatened winter crops. Growing areas in western Kansas and Colorado are experiencing “moderate” to “severe” drought, data from the University of Nebraska at Lincoln show.

U.S. export sales in the four weeks ended Nov. 25 more than doubled from a year earlier, the Department of Agriculture said today. The dollar dropped as much as 0.8 percent against a basket of major currencies, improving prospects U.S. shipments.

Dollar ‘Catalyst’

“We got some good export sales, and the dollar stopped rallying, so that was a little bit of a catalyst” for wheat, said J. Mark Kinoff, the president of Ceres Hedge, a risk-management firm in Chicago.

The U.S. is the world’s largest exporter, followed by France, Canada and Australia, 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 rose 6.5 cents, or 0.5 percent, to $14.44 per 100 pounds. Earlier, the price reached $14.595, the highest since Nov. 12.

Thailand had the worst floods in five decades, which may trigger a 7 percent drop in rice production, the Agriculture and Cooperative Ministry has said. Rice prices may triple in 18 months as supplies dwindle and demand increases, Ed Peter, the chief executive officer of Duxton Asset Management Pte., said this week.

The United Nations Food & Agriculture Organization cut its global rice-production forecast on Nov. 30 for the third time since April as adverse weather harmed crops in Asia. World output may drop to 697.9 million tons, or 6.5 million less than the agency’s June forecast, the organization said.

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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