Wheat futures rose to a 17-month high on speculation that demand for the grain in livestock feed will climb as hot, dry weather scorches the U.S. corn crop.
Corn futures have jumped 52 percent since mid-June, and wheat has surged 41 percent. About 55 percent of the contiguous U.S. states were in moderate to extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center.
“Maybe we’re using wheat more as feed than we used to because of these price levels,” Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas, said in a telephone interview. “Usually when we have problems, it’s in one area. This is larger than normal, and it’s lasting a while.”
Wheat futures for September delivery rose 0.5 cent to settle at $8.85 a bushel at 2 p.m. on the Chicago Board of Trade. The price climbed for the fifth straight session, the longest rally in almost two months. Earlier, the commodity reached $8.985, the highest for a most-active contract since Feb. 15, 2011.
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.