Wheat futures rose on speculation that farmers will abandon more of their winter crop than usual amid lingering drought in the U.S., the world’s top exporter.
As much as 25 percent of hard red winter wheat may not be harvested after the most-severe drought since the 1930s killed plants, Mark Hodges, the executive director of Plains Grains Inc. in Stillwater, Oklahoma, said last week. The Department of Agriculture will announce planting estimates on Jan. 11.
“The winter wheat-seeding number is generally expected to be higher” than last year, Jeff McReynolds, the owner of McReynolds Marketing & Investments in Hays, Kansas, said in a telephone interview. “If the weather pattern doesn’t change, abandonment will be up.”
Wheat futures gained 0.5 percent to settle at $7.5125 a bushel at 2 p.m. on the Chicago Board of Trade. Last week, the price slumped 4 percent, the fifth straight decline and the longest slump since October 2011, amid signs of declining U.S. exports.
On Jan. 4, the price closed at $7.4725, down more than 20 percent from $9.4325 on July 20, the highest settlement since April 9, 2008. That signaled the start of a bear market.
In 2012, wheat gained 19 percent, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.
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.