May 23, 2012

South Africa's wheat price hits record in over seven months

The wheat prices in South Africa reached a seven-month high following a jump in global price as the drought threatens US and Russian harvests, two of the world's three largest exporters this year.

South African wheat prices for July delivery increased 2.2% to ZAR2,948 (US$355) a tonne by the midday close in Johannesburg, the strongest level on a closing basis since October 7. Wheat on the CBOT increased to an eight-month high.

"Due to the extreme dryness in key wheat growing areas in Russia and in parts of the US, the US market traded higher over the weekend and also forced our market higher," Benjamin Swanepoel, a Johannesburg-based trader at Trademar Futures (Pty) Ltd., said in an e-mailed response to questions today.

Before today, wheat futures rallied in six of seven sessions in Chicago after the USDA released its first outlook for the 2012-2013 season on May 10, predicting a smaller global harvest.

The country is sub-Saharan Africa's largest wheat producer and the region's third-biggest importer of the grain after Nigeria and Sudan, according to USDA data.