(Bloomberg) – Wheat rose in Chicago as U.S. production prospects dimmed because of a persistent drought in the Great Plains, the biggest growing region for winter crops. Corn and soybeans gained.
The central and southern plains will have mostly below-normal rainfall in the next 10 days, with no significant relief expected, DTN said in a report yesterday. Severe to exceptional drought conditions cover most of the cultivation area for hard, red winter wheat, running from the Texas panhandle to Colorado to South Dakota, the U.S. Drought Monitor shows. Winter wheat crops were in the worst condition since at least 1985 at the end of November, according to the U.S. Department of Agriculture.
“Crop concerns in the U.S. should continue to lend some support to the market, at least in the near term,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said in a report e-mailed today.
Wheat for delivery in March climbed 0.6 percent to $7.84 a bushel at 6:21 a.m. on the Chicago Board of Trade, headed for a 1 percent gain this week. The grain fell the most since Jan. 22 yesterday after a USDA report showed weekly U.S. export sales slid 49 percent to 293,627 metric tons in the period to Jan. 24.
In Paris, milling wheat for delivery in March rose 0.1 percent to 248 euros ($338) a ton on NYSE Liffe and was up 0.3 percent for the week.
Russian Tax
Wheat demand may increase if Russia decides to scrap an import tax on the grain after domestic prices surged, Jaime Nolan-Miralles, an INTL FCStone Inc. commodity risk manager in Dublin, said in a report. Russia, once the world’s third-largest wheat exporter, will consider abolishing the 5 percent duty, Agriculture Minister Nikolai Fedorov said in Moscow yesterday.
Corn for delivery in March rose 0.5 percent to $7.44 a bushel in Chicago. The grain headed for a fifth straight climb and a 3.2 percent weekly advance.
Prices rallied to a record last year as drought may cut U.S. inventories to the lowest since 1996 and stockpiles in the European Union slide to a nine-year low. Some corn has been contaminated with aflatoxin, a chemical that can harm animals and humans, following last year’s hot, dry conditions, Tate & Lyle Plc said in a statement today.
“Prices are expected to remain high with some volatility over the coming months until the new harvest,” the London-based maker of food and beverage ingredients said.
Soybeans for delivery in March climbed 0.9 percent to $14.8175 a bushel. The oilseed is up 2.8 percent this week, poised for a fourth increase.
