Wheat rose for the first time this week as drought persists in the U.S. southern Great Plains, where winter varieties have gone dormant.
Snow that fell across the Midwest last week did little to help parched soil recover from the worst drought since the Dust Bowl of the 1930s. Parched conditions grip 61 percent of the 48 contiguous U.S. states, according to the U.S. Drought Monitor in Lincoln, Nebraska. Fund managers in the week through Dec. 25 were net-short 11,899 contracts, the most in seven months, Commodity Futures Trading Commission data show.
“We have some dry conditions out here,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said by telephone. “And we’re oversold. The funds pushed things up too high, and now they’ve pushed too low.”
Wheat futures for March delivery gained 0.25 cent to settle at $7.555 a bushel at 2 p.m. on the Chicago Board of Trade. The price earlier had jumped as much as 0.8 percent.
Futures increased 19 percent in 2012, the best performer on the Standard & Poor’s GSCI Index of 24 commodities, after dry weather hurt crops in the U.S., Australia and Russia, the biggest exporters.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.