September 13, 2007

US wheat prices reach another record; corn, soy prices also up

Wheat prices went further into record territory Wednesday (September 12) after the US Department of Agriculture (USDA) projected that US stockpiles will drop to 33-year lows by the end of the crop year.

Demand for US wheat has recently swelled due to increasingly tight supplies despite an all-time high price of US$9 a bushel. Because of adverse wheat conditions, most global wheat harvests were damaged, thus prompting more importers to buy more of the grain on fears of dwindling supply. The USDA projected Wednesday that the country's wheat stocks at the end of the crop year will decline to 362 million bushels, the lowest since 1973-74.

The December wheat contract jumped 11.5 cents to US$9.02 a bushel, after rising as high as US$9.07 a bushel.

Separately, the USDA also said private exporters reported sales of 168,000 tonnes of wheat for delivery to unspecified buyers.

Corn and soybean prices also rose sharply. December corn added 8.75 cents to US$3.50 a bushel, while November soybeans swelled 20.5 cents to US$9.41 a bushel.

The USDA projects corn production will climb 13.3 billion bushels, up 254 million bushels from last month's estimate. However, the agency slashed its soybean production forecast by 6 million bushels to 2.6 billion bushels based on prospects for lower crop yields, particularly in the South. Soybean ending stocks are estimated at a slim 215 million bushels, down 5 million bushels from the August estimate and 61 percent below last year's level.

US farmers planted a huge corn crop this year-- displacing soy plantation-- to take advantage of its record-high prices since the onset of 2007 on booming corn-based ethanol demand.