Wheat Breaches $12 for First Time After Biggest Gain Since 2002
February 26th, 2008Via: Bloomberg:
Chicago wheat prices rose by the most in more than five years, breaching $12 a bushel for the first time as investors poured money into agricultural commodities on signs that global crop production isn’t keeping pace with demand.
Global wheat stockpiles will probably fall to a 30-year low this year, while corn inventories are headed for the lowest since 1984, the U.S. Department of Agriculture said Feb. 8. Almost $1.5 billion flowed into farm commodities in the week to Feb. 19, investment bank UBS AG said in an e-mailed report yesterday.
Wheat, soybeans, corn and palm oil are among commodities that have touched records this month, stoking prices of bread, pasta and noodles worldwide. The gains have driven up costs for food companies from Kellogg Co. to Nissin Food Products Co. and complicated efforts to curb prices in China, India and Malaysia.
“Speculators keep jumping into the market as supplies are very tight globally, especially spring wheat,” Takaki Shigemoto, an analyst with Tokyo-based commodity broker Okachi & Co. Dry conditions in some wheat-producing areas in northern China and also lent support, he said.
Wheat for May delivery rose by the daily limit of 90 cents, or 8 percent, to $12.145 a bushel in after-hours trading on the Chicago Board of Trade, the biggest one-day percentage gain since October 2002. It stood at $11.975 at 3:50 p.m. Singapore time.
The exchange expanded its daily limit after the contract surged by the previous 60-cent limit yesterday.
Stockpiles Shrinking
Record prices, led by scarce high-protein varieties, have not deterred buyers. Export sales from the U.S., the world’s largest shipper of the grain, are up 56 percent since June 1 compared with the same period a year earlier.
Global wheat stockpiles may fall to 109.7 million metric tons by May 31, while corn inventories may decline to 101.9 million tons as of Oct. 1, the U.S. government estimated Feb. 8.
U.S. inventories of wheat will drop to 272 million bushels, or 7.4 million tons, the lowest for the end of the marketing year since 1948, according to the USDA. Hard-red spring varieties, traded in Minneapolis, are in short supply as dry weather curbed output last year in the U.S. and Canada.
