maverick
27-02-2008, 07:36 AM
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 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 prices have more than doubled in the past year as adverse weather reduced output in Europe, Canada and Australia, raising the cost of bread, cakes and cookies. The gains have stoked food inflation around the world and made central bankers cautious about cutting interest rates to stimulate growth.
``Speculators keep jumping into the market as supplies are very tight globally, especially spring wheat,'' said Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co. Dry conditions in some wheat-producing areas in northern China 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 electronic trading on the Chicago Board of Trade, the biggest one-day percentage gain since October 2002. The contract traded at $11.99 a bushel at 2:56 p.m. Singapore time.
The exchange expanded its daily limit by 50 percent after the contract surged by the 60-cent maximum yesterday, leaving buy orders outstanding.
Stockpiles Shrinking
The higher 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.
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 Department of Agriculture. Hard-red spring varieties, traded in Minneapolis, are in short supply as dry weather curbed output last year in the U.S. and Canada.
On the Minneapolis Grain Exchange, wheat for May delivery advanced $1.35, or 7.9 percent, to $18.4325 a bushel. The March contract, which has no limit because it is the closest to delivery, rose as high as $24.26 a bushel, after yesterday becoming the first U.S. wheat contract to top $20 a bushel.
On the Kansas City Board of Trade, hard-red winter wheat also rose as much as the 90-cent limit, or 7.7 percent, to $12.65 a bushel before trading at $12.46 at 2:54 p.m. Singapore time.
Rising Costs
The low stockpiles have added to concern the world's farmers may not be able to grow enough to meet demand for making products from cereals to noodles. Food inflation last year rose 4.7 percent in the U.S., the fastest pace since 1990.
Goodman Fielder Ltd., Australia's largest baker, which today posted a 26 percent drop in first-half profit, said it expects commodity costs to rise about A$210 million ($195 million) this year, 17 percent more than forecast in November.
``Commodities have continued to increase throughout the half and certainly into the early part of this half,'' Chief Executive Officer Peter Margin said on a conference call.
Producers and exporters may benefit from higher prices. AWB Ltd., Australia's largest wheat exporter, rose as much as 13 cents, or 5.8 percent, to A$2.38 on the Australian Stock Exchange and closed at A$2.35.
Export Curbs
The rise in wheat prices has prompted some governments, including China, to impose export taxes on grains to ensure adequate domestic supply and curb price rises.
Kazakhstan, the world's fifth-largest wheat exporter, said it plans to impose export tariffs, the Financial Times reported today. Kazakhstan wants to limit exports in an effort to control domestic inflation, which is almost 20 percent, the newspaper said, citing Agriculture Minister Akhmetzhan Yesimov.
Corn futures for May delivery, which reached a record $5.55 a bushel yesterday, fell as much as 20 cents, or 3.7 percent, to $5.27 and traded at $5.32 at 2:54 p.m. Singapore time. Still, corn is up almost 17 percent this year on demand for grain to produce ethanol and feed livestock.
Soybeans for May delivery, which rose to a record $14.855 a bushel yesterday, declined as much as 26.5 cents, or 1.8 percent, to $14.4275 and stood at $14.4775 at 2:53 p.m. in Singapore.
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 prices have more than doubled in the past year as adverse weather reduced output in Europe, Canada and Australia, raising the cost of bread, cakes and cookies. The gains have stoked food inflation around the world and made central bankers cautious about cutting interest rates to stimulate growth.
``Speculators keep jumping into the market as supplies are very tight globally, especially spring wheat,'' said Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co. Dry conditions in some wheat-producing areas in northern China 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 electronic trading on the Chicago Board of Trade, the biggest one-day percentage gain since October 2002. The contract traded at $11.99 a bushel at 2:56 p.m. Singapore time.
The exchange expanded its daily limit by 50 percent after the contract surged by the 60-cent maximum yesterday, leaving buy orders outstanding.
Stockpiles Shrinking
The higher 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.
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 Department of Agriculture. Hard-red spring varieties, traded in Minneapolis, are in short supply as dry weather curbed output last year in the U.S. and Canada.
On the Minneapolis Grain Exchange, wheat for May delivery advanced $1.35, or 7.9 percent, to $18.4325 a bushel. The March contract, which has no limit because it is the closest to delivery, rose as high as $24.26 a bushel, after yesterday becoming the first U.S. wheat contract to top $20 a bushel.
On the Kansas City Board of Trade, hard-red winter wheat also rose as much as the 90-cent limit, or 7.7 percent, to $12.65 a bushel before trading at $12.46 at 2:54 p.m. Singapore time.
Rising Costs
The low stockpiles have added to concern the world's farmers may not be able to grow enough to meet demand for making products from cereals to noodles. Food inflation last year rose 4.7 percent in the U.S., the fastest pace since 1990.
Goodman Fielder Ltd., Australia's largest baker, which today posted a 26 percent drop in first-half profit, said it expects commodity costs to rise about A$210 million ($195 million) this year, 17 percent more than forecast in November.
``Commodities have continued to increase throughout the half and certainly into the early part of this half,'' Chief Executive Officer Peter Margin said on a conference call.
Producers and exporters may benefit from higher prices. AWB Ltd., Australia's largest wheat exporter, rose as much as 13 cents, or 5.8 percent, to A$2.38 on the Australian Stock Exchange and closed at A$2.35.
Export Curbs
The rise in wheat prices has prompted some governments, including China, to impose export taxes on grains to ensure adequate domestic supply and curb price rises.
Kazakhstan, the world's fifth-largest wheat exporter, said it plans to impose export tariffs, the Financial Times reported today. Kazakhstan wants to limit exports in an effort to control domestic inflation, which is almost 20 percent, the newspaper said, citing Agriculture Minister Akhmetzhan Yesimov.
Corn futures for May delivery, which reached a record $5.55 a bushel yesterday, fell as much as 20 cents, or 3.7 percent, to $5.27 and traded at $5.32 at 2:54 p.m. Singapore time. Still, corn is up almost 17 percent this year on demand for grain to produce ethanol and feed livestock.
Soybeans for May delivery, which rose to a record $14.855 a bushel yesterday, declined as much as 26.5 cents, or 1.8 percent, to $14.4275 and stood at $14.4775 at 2:53 p.m. in Singapore.