August 17, 2011
Wheat prices soar as US farmers lose acreage
Wheat prices rocketed to new record levels since June, returning to US$9/bushel in Minneapolis, on data signalling that farmers had claimed insurance on a high number of lost acres added to fears for the harvest quality.
Wheat for September added 2.8% to US$7.32/bushel in Chicago, the highest for a spot contract since mid-June, while soaring 3.6% to US$9.04/bushel in Minneapolis, where spring wheat is traded.
The rises followed data from the USDA's Farm Services Agency, which handles functions such as conservation programmes, farm loans and disaster relief, showing that farmers had claimed so-called "prevent plant" insurance on some 3.8 million acres of wheat, brokers said.
"It's possible that the acres for wheat are lower than we previously thought," Mike Mawdsley at Market 1 said.
At US Commodities, Don Roose, the broker's president, said: "It does look quite a bit."
The data added to a picture of a potentially disappointing spring wheat crop, with USDA data overnight showing a slow pace of harvesting, a reflection of rain-delayed sowings, with just 13% of the crop in silos, compared with 39% a year ago.
The 66% of the crop rated in "good" or "excellent" condition compared with 82% a year ago.
And Matthew Pierce at PitGuru noted talk of early-cut wheat in South Dakota "missing the mark [on quality] by a wide margin".
However, Roose questioned whether the data, which also showed high rates of prevent plant claims on corn and soybeans too, had already been factored in to revised USDA crop estimates released last week.
If the figure of 1.4 million acres of prevent plant on soybeans was being viewed by the market as coming in addition to those already lost "then prices would have risen to levels to the limit on the upside", he said. "It may just be confirmation of what the government has already reported."
With half an hour of trading to go, September wheat was 2.1% higher at US$7.27/bushel in Chicago, and up 3.3% at US$9.01/bushel in Minneapolis.
