Wheat futures rose on mounting concern that the most-severe drought since the 1930s will erode prospects for the winter crop in the U.S., the world’s biggest grain exporter.
Little or no rain fell in the past 30 days in parts of Kansas, the biggest U.S. winter-wheat grower, National Weather Service data show. Parts of the southern Great Plains are in an “exceptional drought,” facing widespread crop and pasture losses and water shortages, according to the U.S. Drought Monitor.
“The western Wheat Belt area is dry, and we’re expecting a shorter crop with this lack of adequate moisture,” Jamey Kohake, the branch manager at Paragon Investments in Silver Lake, Kansas, said in a telephone interview.
Wheat futures for March delivery rose 0.25 cent to close at $7.5625 a bushel at 2 p.m. on the Chicago Board of Trade.
Earlier, the price climbed as much as 2 percent after the U.S. Department of Agriculture cut its forecast for global inventory by 3.5 percent on signs of higher use in livestock feed.
This week, the grain dropped 1.1 percent, the third straight decline, on signs of slack demand for U.S. exports
Kansas City Board of Trade futures were 43.5 cents a bushel above the Chicago price. The premium has tumbled 25 percent this month.
High-protein hard red winter wheat used mostly in bread trades in Kansas City, and the CBOT offers the Midwest soft red winter variety used in cakes and cookies.
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.