Wheat Rises as Lingering U.S. Drought Curbs Production Outlook
Wheat rose as production prospects dimmed because of a persistent drought in the southern Great Plains, the biggest U.S. growing region for winter crops.
The area will have mostly below-normal rainfall in the next 10 days, with no significant relief expected, weather forecaster DTN said in a report. Severe to exceptional drought conditions cover most of the cultivation region for hard, red winter wheat, running from the Texas panhandle to Colorado to South Dakota, the U.S. Drought Monitor shows.
“There’s definitely concern” about the winter crops, Shawn McCambridge, a senior grain analyst for Jefferies Bache LLC in Chicago, said in a telephone interview. “While the crop is in dormancy, the water requirements are very low, so the spring weather conditions will be crucial to determining production.”
Wheat futures for March delivery climbed 0.9 percent to $7.8625 a bushel at 10:23 a.m. on the Chicago Board of Trade. The price gained 0.2 percent last month, the first increase since September.
Wheat demand may increase if Russia decides to scrap an import tax on the grain after domestic prices surged, Jaime Nolan-Miralles, an INTL FCStone Inc. commodity risk manager in Dublin, said in a report. Russia, once the world’s third-largest wheat exporter, will consider abolishing the 5 percent duty, Agriculture Minister Nikolai Fedorov said in Moscow yesterday.
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
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