February 8, 2008
By Madelene Pearson
Bloomberg
Wheat, the best performing commodity this year, surged to a record on three U.S. futures exchanges on concern that supplies of spring grain will fall short of demand.
U.S. inventories of hard red spring wheat, used to make bread and pasta, will fall 25 percent from a year earlier by May 31, according to the Department of Agriculture. Canadian wheat supplies tumbled 30 percent last year, Statistics Canada said this week.
Wheat has more than doubled in the past year, raising costs for food makers including Kellogg Co., Sara Lee Corp. and Japan's Nissin Food Products Co. Prices have soared as adverse weather cut production in Australia, Canada and the U.S., pushing wheat to a record in Chicago, Minneapolis and Kansas.
``There's desperation and there's the situation where they are not worried about the price, they just have to buy it,'' Ben Barber, commodity broker with Bell Commodities Ltd. said by phone from Melbourne today. ``It's in uncharted territory now and how far it goes is anyone's guess.''
Wheat futures for March delivery on the Chicago Board of Trade rose the daily limit of 30 cents, or 2.8 percent, to a record $10.93 a bushel in after hours electronic trading in Sydney. Prices have advanced the limit for five straight sessions.
The commodity is heading for its biggest weekly gain in more than 32 years, rising 16 percent in Chicago. That's the largest advance since a 19 percent gain in the week ended July 11, 1975.
CORN, SOYBEANS
Corn and soybeans, which both reached records this week on concern rising global demand would erode U.S. inventories before the next harvests, also gained today.
Analysts surveyed by Bloomberg expect stockpiles of both crops will be down from January forecasts when the U.S. Department of Agriculture updates its estimates today in the U.S.
Corn for March delivery rose as much as 16 cents, or 3.2 percent, to $5.155 a bushel on the Chicago Board of Trade in after-hours electronic trading and were at $5.135 at 2:21 p.m. in Sydney. The commodity has gained 28 percent in the past year, and reached a record $5.2875 on Feb. 6.
Soybeans for March delivery rose as much as 35 cents, or 2.6 percent, to $13.665 a bushel in Sydney. Prices reached a record $13.73 this week and are up 84 percent in the past year as farmers in the U.S. planted the fewest acres in 12 years. The U.S. is the biggest producer and exporter of soybeans.
MINNEAPOLIS, KANSAS
In Minneapolis, where spring wheat is traded, the March contract also rose the 30-cent limit, gaining 2 percent, to $15.53 a bushel. The contract breached $15 yesterday, the first time any U.S. contract for the grain has done so. The price has advanced the daily limit 11 of the past 12 days of trading.
Wheat for March delivery jumped the 30-cent limit to add 2.7 percent, to $11.4025 a bushel on the Kansas City Board of Trade in after-hours trading in Sydney. It's the fifth day the contract rose its daily limit.
U.S. inventories of high-protein hard red-spring wheat will fall to 88 million bushels at the end of the marketing year, according to the USDA. Global wheat stockpiles will fall to 110.9 million tons, the lowest since 1978, the USDA said on Jan. 11.
``People are starting to become a little more urgent about just where supplies in the near term are going to come from,'' Justin Smirk, senior economist at Westpac Banking Corp. said from Sydney. Prices are likely to be ``volatile'' in the near term and will spur farmers to lift plantings, he said.
``If everyone gets really optimistic and starts putting in big crops and locking in prices at these levels, that can set the tone on when you can get a correction in prices,'' he said.
http://www.bloomberg.com/apps/news?pid=20601091&sid=ac6jJRKhQgTs&refer=india
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