November 9 2010

CBOT wheat advances for a fourth day on tightening global supply
 

Wheat futures increased a fourth day to the highest in seven weeks having expectations that the USDA will decrease its estimation of global supply.

The December-delivery contract increased as much as 1.1% to US$7.445 a bushel which was the highest price since September 20, on CBOT, before trading at US$7.4375 recently.

World inventories of wheat may decrease to 173.53 million tonnes before the 2011 harvest, according analysts' estimates. This is less than the 196.53 million tonnes in the previous year and the USDA estimate of 174.66 million tonnes in October.

The dry weather in the Great Plains caused the condition of the US winter-wheat crop to deteriorate last week. Approximately 45% of winter wheat was rated good or excellent as of November 7 but this is less than the rating of 46% last week and 63% a year earlier, the USDA said on November 8.

About 95% of the crop was planted in 18 states, mostly in the Midwest and Great Plains in contrast to 92% recently and 86% in the previous year.

Because of the dryness, plants have not been able to establish strong root systems, leaving them vulnerable to "winter kill," said David Streit, an agricultural meteorologist at the Commodity Weather Group LLC in Bethesda, Maryland. A strong cold air mass in the sub-zero range would make the crop more susceptible to dying out, he said.

March-delivery corn increased by 0.8% and amounted to US$6.038 a bushel in Chicago, while January-delivery soy rose by 0.5% to US$12.81 a bushel.