South African wheat rallied to a seven-month high after the global price surged as dry weather threatens the harvests in the U.S. and Russia, two of the world’s three biggest shippers this year.
South African wheat prices for July delivery increased 2.2 percent to 2,948 rand ($355) a metric ton by the midday close in Johannesburg, the strongest level on a closing basis since Oct. 7. Wheat on the Chicago Board of Trade increased to an eight-month high.
“Due to the extreme dryness in key wheat growing areas in Russia and in parts of the U.S., the U.S. market traded higher over the weekend and also forced our market higher,” Benjamin Swanepoel, a Johannesburg-based trader at Trademar Futures (Pty) Ltd., said in an e-mailed response to questions today.
Before today, wheat futures rallied in six of seven sessions in Chicago after the U.S. Department of Agriculture released its first outlook for the 2012-2013 season on May 10, predicting a smaller global harvest.
Russia’s total grain harvest may drop 2.7 percent to 91 million tons from last month’s forecast of 93.5 million tons because of drought in southern regions, the Moscow-based Institute for Agricultural Market Studies said on May 18.
The country is sub-Saharan Africa’s largest wheat producer and the region’s third-biggest importer of the grain after Nigeria and Sudan, according to USDA data.