Wheat prices rise to 11-week high
Wheat rose the most in 11 weeks on speculation that the dollar's decline will boost demand for US supplies of the grain.
The dollar has plunged 8.8 percent in the past six months against a basket of six major currencies, making US supplies cheaper for some overseas buyers. The US currency touched the lowest ever against the euro on Wednesday. Wheat is up 59 percent since June 1, partly because of increased demand for US supplies.
"We have to rally wheat high enough to choke off demand, but it's hard to choke off demand when the dollar keeps getting weaker," said Tomm Pfitzenmaier, a partner at Summit Commodity Brokerage in Des Moines, Iowa.
Wheat futures for March delivery rose the exchange limit of 30 cents, or 3.8 percent, to $8.26 a bushel on the Chicago Board of Trade, the biggest gain since September 4 and the highest price this month. Most-active futures have gained 72 percent in the past year after adverse weather hurt global crops.
Trading ended early on Wednesday in Chicago and was closed yesterday for the Thanksgiving holiday in the United States.
Advance sales of US wheat as of November 8 were up 93 percent in the marketing year that began June 1, compared with the year-earlier period, the Department of Agriculture said last week.
Some wheat-importing countries bought at record prices, because they were concerned the world's farmers wouldn't produce enough to meet their needs. Some buyers purchased wheat to curb food-price inflation.
Brazil imports
Brazil, the world's largest importer of the grain, bought 317,000 tons of US wheat from August through October, the most since 2003, the USDA agricultural attach in Brasilia said in a report last week. The country normally imports wheat from Argentina, which closed export registration for a week in March and increased the tax on wheat shipments earlier this month.
Brazil may import as much as 400,000 tons of US wheat next year, the attach said.
Adverse weather has curbed yields in several producing countries this year. Drought damaged plants in Canada and Australia and excessive rainfall reduced output in the US, France and Germany.
Little or no rain has fallen in the US southern Great Plains, including Kansas, Oklahoma and Texas, in the past 30 days, according to the National Weather Service. Kansas is the biggest wheat-producing state.
"Some light mixed precipitation later in the week will do little to improve soil moisture conditions," Woburn, Massachusetts-based forecaster Meteorlogix LLC said in a report.
"Very dry weather over western areas is impacting crop emergence and development."
Global stockpiles
Global stockpiles are expected to fall to 109.8 million tons by May 31, the lowest in 30 years, the USDA said in a report this month. US inventories in storage were forecast to drop 32 percent to 8.49 million tons.
Wheat futures are also rising as the price of crude oil reached a record $99.29 a barrel on Wednesday in New York. Higher oil prices may boost demand for soybeans to be turned into fuel, prompting more US growers to shun spring wheat or tear out poor-performing winter wheat to plant soybeans in May.
The price of soybeans is up 61 percent in the past year after US farmers planted the fewest acres with the oilseed in 12 years to instead sow more-profitable corn. Soybeans closed at $10.87 a bushel in Chicago, the highest since 1973.
Wheat was the fourth-biggest US crop in 2006, valued at $7.7 billion, behind corn, soybeans and hay, according to government data.
Bloomberg News
(China Daily 11/23/2007 page16)
