Wheat Rises on Egypt, Iraq Imports, Drought Damage in Australia
bloomberg.com
By Jeff Wilson and Tony C. Dreibus
Oct. 4 (Bloomberg) -- Wheat rose to a 10-year high in Chicago as Egypt and Iraq purchased U.S. supplies and drought reduced production in Australia, the world's third-largest exporter.
Egypt, the world's largest wheat importer, bought 115,000 metric tons of U.S. grain and Iraq purchased 100,000 tons, the U.S. Department of Agriculture said. The state of South Australia today cut its crop estimate 32 percent because of drought. Global inventories of the grain will plunge 14 percent next year, the industry funded U.S. Wheat Associates estimates.
``We've got the tightest supplies worldwide in the last 30 years,'' said Mark Green, an account executive for Schwieterman Inc., a grain broker in Garden City, Kansas. ``We're finally starting to see some of the fall demand surface and it's probably a situation that's been coiling and building up to a crescendo.''
Wheat for December delivery rose 25.5 cents, or 5.8 percent, to $4.65 a bushel on the Chicago Board of Trade, after reaching $4.695, the highest price for a most-active contract since Aug. 15, 1996. Prices are up 34 percent in the past year.
Today's gains accelerated when prices rose above the Oct. 2 high of $4.585, said Dale Durchholz, a market analyst for AgriVisor Services Inc. in Bloomington, Illinois. Speculators who had been betting on a price decline were buying contracts to close out those positions, he said.
Speculator Buying
Commodity fund managers, hedge funds and other large speculators reduced their net short positions in Chicago wheat futures 39 percent to 11,264 contracts in the week ended Sept. 26 from 18,362 contracts a week earlier, the Commodity Futures Trading Commission said Sept. 29.
``The big speculative funds were short wheat,'' Durchholz said. ``When prices broke out to the highest since 1996, the money just rolled in to get long wheat. People were just caught short.''
Demand will rise as India imports 6 million tons of wheat this year, up from 300,000 tons last year, making it the world's fourth-largest importer, USDA said in a Sept. 14 report.
Wheat production in Australia may be 12 million to 15 million metric tons this year, down from 25.1 million last year, said AWB Ltd., Australia's monopoly wheat exporter Sept. 27.
Farmers in South Australia, the nation's third-largest wheat-growing region, may gather 3.2 million metric tons of grain including wheat, barley and canola in the October-to- January harvest, the state government's Rural Solutions SA said today on its Web site. The forecast has been reduced three times in as many months, as crops were hurt by below-average rainfall the past nine months.
Global inventories of wheat will fall to 126 million tons on May 31, 2007, from 146 million on the same date this year, Washington, D.C.-based U.S. Wheat Associates said Sept. 12.
World wheat production in the year ending June 2007 will fall 4.9 percent to 588 million metric tons, the International Grains Council forecast Sept. 28. |
