June 3, 2011

CBOT wheat rises as Russian exports might trail world demand

CBOT wheat futures rose for the first time in three days on speculation that exports from Russia would not be enough to help meet higher global demand, while CBOT corn and soy also gained.

Russia, which will lift a ban on grain exports on July 1, may need to implement duties on shipments to cap domestic prices, RIA Novosti reported, citing Sergey Ignatiev, the central bank chairman. Global wheat output may trail consumption as adverse weather from the US to Europe threatens yields, the International Grains Council said.

"With Russia, politics may be a factor with regard to how much wheat they export," said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. "There's already talk about export duties being implemented to limit the amount of grain that's allowed to be exported."

CBOT wheat futures for July delivery rose 10.5 cents, or 1.4%, to settle at US$7.6975 a bushel. The price dropped 7.4% in the previous two days after Russian Prime Minister Vladimir Putin ended an export ban that was imposed in August following a drought. The grain has jumped 74 % in the past year.

Russia was once the world's second-biggest wheat exporter. The US is the leading shipper.

Corn futures for July delivery rose 8 cents, or 1.1%, to US$7.665 a bushel. The commodity has more than doubled in the past year on surging demand from makers of ethanol and livestock feed, while wet weather slowed planting in the US, the top producer.

Soy futures for July delivery climbed 20.75 cents, or 1.5%, to US$14.07 a bushel on CBOT. Earlier, the price reached US$14.115, the highest for a most-active contract since April 11. The oilseed has gained 51% in the past year.

Parts of the northern Great Plains, where planting has been delayed this year because of wet weather, may get as much as 1.5 inches (3.8 centimeters) of rain in the next five days, Commodity Weather Group said in a report. Portions of the Missouri River also are flooding in South Dakota, the forecaster said.

About 86% of the US corn crop was planted as of May 29, behind the five-year average of 95%, the USDA said this week. Soy seeding was 51% completed, less than the 71% average. Spring-wheat sowing was 68% finished, down from the 95% average.

"We're probably not going to get all the acres planted that we thought we would," said Dan Kuechenmeister, the manager of the commodity department at RBC Dain Rauscher in Minneapolis.

Corn is the biggest US crop, valued at US$66.7 billion in 2010, followed by soy at US$38.9 billion, government figures show. Wheat was fourth at US$13 billion, behind hay.