Wheat rose in Paris on speculation global grain supplies will shrink as drought threatens to reduce crops in the U.S., the world’s biggest exporter.
No significant rain was expected in the central and southern U.S. Great Plains over the next 10 days, forecaster DTN said in a report Jan. 18. All of Kansas and Oklahoma, the biggest U.S. wheat growers, were experiencing severe to exceptional drought as of Jan. 15, according to the U.S. Drought Monitor, a gauge compiled by government and academic groups. U.S. winter-wheat crops will be dormant until about March before the harvest starts in June.
“The long-discussed subject of the drought is now increasingly unsettling the markets again,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report today. Wheat futures bought and sold on the Chicago Board of Trade jumped the most since July last week.
Milling wheat for delivery in March traded in Paris on NYSE Liffe climbed 1.4 percent to settle at 251.50 euros ($334.85) a metric ton. The grain rose 1.8 percent in the previous two weeks. Agricultural markets in Chicago are closed today for Martin Luther King Jr. Day.
“There is still no end in sight to the dry conditions in the key growing areas of the U.S. Great Plains, which therefore threatens to significantly reduce the 2013-14 season harvest,” Fritsch said.
Winter grain crops in the European Union probably won’t experience damaging frost through at least the end of this month, the bloc’s Monitoring Agricultural Resources unit said today. Hardening of winter crops is “well advanced,” meaning plants are dormant and able to withstand lower temperatures, according to the report.
Rising demand also is supporting prices, Fritsch said. In the week ended Jan. 10, U.S. exporters sold 536,166 tons of wheat for delivery this marketing year, more than twice the prior week’s amount, the U.S. Department of Agriculture said Jan. 17.
Rapeseed futures for May delivery rose 0.6 percent to 457 euros a ton in Paris, climbing for the fifth time in six sessions. Maize, or corn, futures for March delivery advanced 0.7 percent to 243.25 euros a ton.