Wheat rose on speculation that demand for the grain by U.S. livestock feeders and overseas buyers will increase.
Animal feedlots will use 180 million metric tons of the grain in the 2011-12 season, the U.S. Department of Agriculture said on April 10. That’s up 24 percent from the government’s estimate a month earlier. Exports of the grain may increase after prices slipped this month, said Frank Cholly, a senior commodities broker at RJO Futures in Chicago. Before today the grain fell 4.1 percent in April.
“The market is in a sideways trading range, and we’re at the lower end right now, so maybe we’ll see more feeding at these price levels,” Cholly said in a telephone interview. “It’s a market that is a little oversold, and we do see demand pick up as the price drops.”
Wheat futures for July delivery climbed 2.1 percent to $6.47 a bushel at 10:29 a.m. on the Chicago Board of Trade. As of yesterday, the most-active contract was down 2.9 percent this year.
The price also gained on speculation that cold weather in the northern U.S. Great Plains will slow development of plants. The cold will delay germination of recently planted wheat and hurt plants emerging from the ground, Telvent DTN said in a report today. Cold weather in the Midwest including Illinois “is not expected to be a significant problem,” according to the report.