Wheat traded near the highest price in four months in Chicago on speculation that South America may seek more U.S. supplies after dry weather.
The worst drought in 50 years in areas of Argentina, South America’s biggest wheat exporter, resulted in “irreversible damage” to the crop and eroded conditions for recently planted corn, researcher Oil World said yesterday. About 20.58 million bushels of U.S. wheat were inspected for export in the week ended Oct. 17, up 25 percent from a year earlier, the Department of Agriculture said. Brazil, the third-biggest wheat importer and a traditional buyer from Argentina, stepped up U.S. purchases this year, USDA data show.
“I struggle to be bearish wheat at these levels,” Chris Gadd, an analyst at Macquarie Group Ltd. in London, said by telephone today. “South American wheat in general looks pretty poor, not only in Argentina, but in parts of Brazil and Paraguay the situation is pretty bad. The U.S. is going to get an awful lot of demand, and the balance sheet is going to be tight.”
Wheat for delivery in December climbed 1 percent to $7.08 a bushel at 6:56 a.m. on the Chicago Board of Trade. Prices touched $7.1125 on Oct. 21, the highest since June 21. The grain is still down 9 percent this year as the USDA estimates global output may rise to a record 708.9 million metric tons.
Wheat inventories in the U.S., the world’s top exporter, may drop to a six-year low of 15.3 million tons by the end of the 2013-14 season, the USDA said in September. The agency, which didn’t release monthly supply and demand estimates in October because of the U.S. government shutdown that ended last week, is scheduled to update its forecasts on Nov. 8.
Milling wheat for delivery in January rose 0.9 percent to 204.50 euros ($281.25) a ton on NYSE Liffe in Paris after touching 205.75 euros, the highest since June 5 for a most-active contract.
Wheat also was supported as excess rain in Russia and Ukraine kept farmers from planting some winter crops, said Simon Clancy, director brokering services at Ikon Commodities Pty Ltd. in Sydney. Russia may lose 4 million tons of wheat from its potential harvest after rains restricted sowing, the Institute for Agricultural Market Studies said last week.
Soybeans for delivery in January rose 0.5 percent to $13.0425 a bushel in Chicago. Corn for delivery in December gained 0.6 percent to $4.4075 a bushel after falling the most in two weeks yesterday.