Wheat Rallies, Extending Record in Minneapolis, on Low Supply
Wheat rose in Chicago on signs of
rising demand for limited U.S. supplies of high-protein spring
varieties. Prices touched a record in Minneapolis, topping $14 a
bushel for the first time for any U.S. wheat contract.
Hard-red spring varieties, used to make bread and cereal,
are in short supply partly because dry weather curbed output
last year in the U.S. and Canada, the worlds two largest
exporters. Prices in Minneapolis surged 32 percent last month
and have more than tripled in the past two years.
“There doesnt seem to be any hard-red spring wheat
available, Jerod Leman, a broker at Wellington Commodities in
Carmel, Indiana. “Its going to be a fight for acres this year,
and were going to need a lot of spring wheat.
Wheat futures for March delivery rose 13.5 cents, or 1.4
percent, to $9.43 a bushel on the Chicago Board of Trade.
Futures have more than doubled in the past year and reached a
record $10.095 on Dec. 17, partly because importers increased
purchases on concern the worlds growers wouldnt produce enough
to meet demand.
On the Minneapolis Grain Exchange, wheat futures for March
delivery rose the exchange limit of 30 cents, or 2.2 percent, to
a record $14.03 a bushel. The contract had jumped the daily
maximum in six of the past seven sessions. The price topped
records 10 times in January.
Plant Other Crops
Farmers who normally grow spring wheat may instead sow
soybeans, which have gained 78 percent in price the past year
and touched a record $13.415 a bushel on Jan. 14. Some also may
seed corn, which reached a record $5.1925 a bushel last month.
Global inventories of wheat are expected to fall to 110.9
million tons by the end of the marketing year on May 31, the
lowest since 1978, the U.S. Department of Agriculture said last
month. U.S. stockpiles may fall to 292 million bushels, or 7.95
million tons, by May 31, USDA data show.
Another concern for farmers in the northern Plains is
finding enough spring-wheat seed to plant. Supplies are low
because some growers who normally grow seed wheat sold the crop
as grain as prices rose, said Louise Gartner, owner of Spectrum
Commodities in Beavercreek, Ohio.
Kellogg Co., the largest U.S. cereal maker, reported
fourth-quarter profit dropped 3.3 percent partly because of
higher wheat costs. Net income fell to $176 million, or 44 cents
a share, from $182 million, or 45 cents, a year earlier, the
company said on Jan. 30. The price increases arent yet
affecting most consumers in the U.S., Leman said.
“Theyre talking about maybe raising prices 20 cents for a
box of cereal — Im not sure if the average consumer is going
to notice the price increase, Leman said. “But I dont think
weve seen the worst of it.
A storm in China that dropped snow on some wheat-growing
areas probably wont damage the crop and instead may provide
moisture to soil, Woburn, Massachusetts-based Meteorlogix LLC
said in a report. That may benefit plants when they emerge from
winter dormancy in March, the forecaster said.
Wheat was the fourth-biggest U.S. crop in 2006, valued at
$7.7 billion, behind corn, soybeans and hay, government data
show.
