Wheat climbed to the highest level since August 2008 in Chicago as drought threatened to damage crops in China, curbing global supplies, and as Middle Eastern and African nations boosted purchases to tackle food inflation.
March-delivery wheat rose as much as 1.1 percent to $8.84 a bushel on the Chicago Board of Trade, the highest for the most- active contract since Aug. 25, 2008, and was at $8.8275 at 10:59 a.m. Paris time. European wheat futures also gained.
Wheat has surged 83 percent in Chicago and more than doubled in Paris in the past year as drought in Russia and floods in Canada and Australia hurt crops. Countries in the Middle East and North Africa are speeding up grain purchases after rising food prices contributed to riots and protests. Now China, the largest wheat producer, is facing severe drought in the main, winter-wheat growing region.
“Wheat is at the center of issues for the market now,” said Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul. “China’s poor crop weather has fueled concern over tightening supplies after some countries in North Africa and the Middle East rushed to secure food.”
World food prices rose to a record in January, the United Nations’ Food & Agriculture Organization said on Feb. 3. China raised interest rates for the third time in four months, effective from today, to contain inflation.
The drought in China’s wheat-growing regions may worsen “rapidly” as the weather gets warmer, the Ministry of Agriculture said Feb. 4. The drought affected 35 percent of wheat crops in eight provinces as of that date, it said.
“On the weather front, the drought in China is at center-stage right now, as wheat is starting to come out of dormancy,” Paris-based farm adviser Agritel said in a commentary today.
Milling wheat for March delivery traded on NYSE Liffe in Paris rose 0.8 percent to 278.25 euros ($379.89) a metric ton, while November-delivery wheat, the contract with the most volume and greatest open interest, rose 1 percent to 244 euros.
Wheat traded on China’s Zhengzhou Commodity Exchange for September delivery, the most-active contract, jumped 5.4 percent to a record 3,006 yuan ($463) a ton on. The exchange had been closed from Feb. 2 for the Lunar New Year break.
Chinese wheat output may have dropped to 114.5 million tons at the last harvest, compared with 115.1 million tons a year earlier, according to U.S. Department of Agriculture estimates. Macquarie expects output to drop a further 4 million tons this year. The USDA will update its outlook today.
U.S. wheat reserves on May 31 probably will total 808.3 million bushels, compared with 818 million forecast in January and 976 million a year earlier, a Bloomberg survey showed. World wheat inventories may decline to 177.2 million tons, a survey found, from 178 million estimated by the USDA in January and 197.4 million a year earlier.
The USDA may cut its forecast for world corn inventories before the Northern Hemisphere harvests to 125.4 million tons, from 127 million estimated in January and 147.1 million a year earlier, the survey showed. That would be the lowest level of reserves since 2007.
March-delivery corn rose as much as 0.6 percent to $6.78 a bushel and was last at $6.7775. The price reached $6.825 on Feb. 7, the highest since July 15, 2008.
Soybeans for March delivery gained as much as 0.5 percent to $14.415 a bushel and last traded at $14.38. The price touched $14.525 on Feb. 3, the highest since July 2008.
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