Wheat Rises as Dryness Threatens Crops in Australia and Canada
July 20 (Bloomberg) -- Wheat prices rose the most in nine weeks on speculation that unusually hot, dry weather will damage crops in Australia, Europe and Canada after drought reduced production in the U.S. by 14 percent this year.
Western Australia, central Europe and the Canadian prairie areas will have unusually high temperatures and less rain than normal during the next 10 days, said meteorologist David Streit at Earth Satellite Corp. in Rockville, Maryland. Wheat prices surged 21 percent in Chicago during the past year, and reached a 10-year high in Kansas City on July 11.
``It's all weather, weather and more weather,'' said Sid Love, an analyst for Kropf and Love Consulting in Overland Park, Kansas. Supplies are being threatened further by insufficient moisture in the Great Plains, which would put next year's U.S. crop at risk, Love said.
Wheat futures for July delivery rose 13.5 cents, or 3.4 percent, to $4.045 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since May 17. Before today, prices had fallen 9.2 percent from a three-year high of $4.33 on May 23 as export demand slowed.
Wheat for July delivery on the Kansas City Board of Trade rose 15.5 cents, or 3.2 percent, to $5.025 bushel, the biggest percentage gain for a most-active contract since May 17. Prices are down 4.7 percent from a 10-year high of $5.275 on July 11.
Kansas City wheat futures have risen 48 percent in the past year as drought from Texas to Montana damaged U.S. crops. The U.S. is the biggest exporter of wheat and the third-largest producer behind China and India. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Declining Output
U.S. wheat production will fall to 1.806 billion bushels this year from 2.105 billion in 2005, the U.S. Department of Agriculture said July 12. Supplies of winter wheat, used to make bread, pastries and all-purpose flour, was pegged at 1.28 billion bushels, down 15 percent from 1.499 billion last year.
Falling supplies of wheat may reduce profit margins for flour millers such as Cargill Inc. and Archer Daniels Midland Co. and exporters like Noble Group Ltd. and Bunge Ltd., leading to increased imports from Canada, which has a large surplus left over from last year's harvest, Love said.
U.S. reserve inventories of domestic wheat at the end of May 2007, before next year's harvest, will fall to 438 million bushels, compared with this year's surplus of 568 million bushels, the government said.
World Production
The world wheat crop was forecast at 605.2 million metric tons for the 2006-2007 marketing year, compared with 599.8 million tons estimated in June and last year's global harvest of 621.9 million tons, USDA said. Reserve global inventories at the end of May 2007 were estimated at 133.2 million tons, down from 145 million this year and the lowest in four years.
The National Weather Service predicted hot weather the next 90 days will deplete soil moisture for wheat planting in the Great Plains. ``The 90-day outlook does not suggest soil moisture will be replenished,'' Love said.
Quelle: http://www.bloomberg.com/apps/…Im4iCWys8&refer=australia