Wheat rose, capping the longest rally in four years, as dry weather persisted in the U.S. Great Plains, depleting soil moisture and eroding prospects for dormant winter crops.
The southern Plains may be mainly dry with above-normal temperatures over the next 10 days, according to a Telvent DTN forecast. Much of Texas, western Oklahoma and southwest Kansas is suffering from “extreme” to “moderate” drought after months of below-average precipitation, the University of Nebraska at Lincoln said.
“Wheat is partially pulled up by southern Plains weather,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said in a telephone interview. “We’re looking at drier weather with no follow-up snow from the storms a couple of weeks back.”
Wheat futures for March delivery rose 1 percent to settle at $6.5125 a bushel at 1:15 p.m. on the Chicago Board of Trade. The commodity advanced for the eighth straight session, the longest rally since October 2007. Earlier, the price reached $6.56, the highest for a most-active contract since Nov. 9.
The grain has dropped 18 percent this year, heading for the biggest annual slump since 2008, after countries including Russia, Australia and Canada boosted production.
Wheat gained today on speculation that demand for U.S. exports will increase for use in livestock feed as a lack of rain threatens corn and soybean crops in South America.
Dry weather “is going to hurt corn and soybean crops down there, so that could cut into world production and world grain supplies,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said in a telephone interview.
Wheat is the fourth-largest U.S. crop, valued at $13 billion in 2010, behind corn, soybeans and hay, government data show.