April 26, 2007

 

Wheat soars to 6-month high as Canada seen to reduce acreage; corn and soybeans up

 

 

Wheat futures in Chicago rose for a second day to a six-month high after farmers in Canada declared they planned to decrease acreage by 10 percent to grow more profitable crops. Corn and soybeans also gained.

 

Canada, the second-largest wheat exporter behind the US, will sow 23.8 million acres this year, down from 26.4 million in 2006, Statistics Canada said on April 24. The decline will further shun global inventories, which the US government estimated will to drop this month to 121.2 million metric tonnes until May 31, the lowest since 1982.

 

Wheat futures for July delivery increase to as much as 13.25 cents, or 2.6 percent, to US$5.3375 a bushel, the highest since October 25, and traded at US$5.31 in after-hours electronic trading on the Chicago Board of Trade. The price reached a 10-year high of US$5.57 on October 17 after a long dry spell cut global production.

 

The most-active wheat contract yesterday rose as much as the exchange's daily limit of 30 cents to US$5.275 before closing up 23 cents, or 4.6 percent, at US$5.205. It gained 5.1 percent last week to the highest since December on concern that a freeze in the central US in early April may damage crops.

 

Data from the US Department of Agriculture said Canada--where wheat is mostly sown in spring--accounted for about 14 percent of international trade in milling wheat last year. The US corners 24 percent of the market share.

 

In the physical market, South Korea's Dongah Flour Mills Co.and CJ Corporation, a food processor, are jointly tendering today to buy a combined 22,400 metric tonnes of US milling wheat for shipment in June to Busan.

 

Wheat is the fourth-largest US crop with a value of US$7.7 billion in 2006. Corn is the biggest, valued at a record US$33.8 billion last year, with soybeans in second place and hay in third, according to the USDA.

 

Corn futures gained for a third day as wet weather delayed planting in the US Midwest, increasing the likelihood more acres will be switched to producing soybeans.

 

Corn futures for July delivery rose as much as 7.25 cents, or 1.9 percent, to $3.89 a bushel and traded at $3.885 in after- hours electronic trade at 11:07 a.m. Singapore time.

 

Soybeans for July delivery rose 4.25 cents, or 0.6 percent, to US$7.42 a bushel at the same time.

 

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.