June 29, 2011


CBOT wheat surges as rains threaten US crops

 

 

Wheat futures surged the most in almost six weeks on concern that crops in the northern US Great Plains are deteriorating after excessive rainfall delayed planting and sapped nutrients from the soil.

 

About 69% of spring-wheat crops were in good or excellent condition as of June 26, down from 72% a week earlier, the USDA said. Parts of North Dakota and Montana, the biggest domestic growers of the variety, have had triple the normal amount of rain in the past two months, according to data from the National Weather Service.


Wheat futures for September delivery rose 21 cents, or 3.2%, to settle at US$6.7175 a bushel at on the Chicago Board of Trade, the biggest gain for a most-active contract since May 18. The gain was the first in five sessions. Prices are down 14% this month on concern that commodity demand will shrink as Greece's debt crisis threatens to slow global economic growth.


The drop in wheat prices may spur demand from livestock producers contending with high costs of corn for feed, Gartner said. July-delivery wheat was 42.75 cents cheaper than July corn today on the CBOT. Demand also may increase for milling-grade wheat in the southern and central Plains, as excess moisture in the north threatens to erode crop quality, Gartner said.

 
"There's great demand for wheat for the feed channels, and high-quality milling wheat," Gartner said. "The high-protein wheat coming out of Kansas should be meeting up with a lot of demand."


Wheat is the fourth-largest US crop, valued at US$13 billion in 2010, behind corn, soy, and hay, government data showed.

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