Some Chicago Board of Trade wheat contracts climbed to an all-time high on robust demand, crushing an 11-year price record.
The nearby September wheat contract rose four cents to $7.2250 a bushel, ending below the day's life-of-contract high of $7.41.
But it was the most-active December contract that set the record of $7.54 a bushel during trading, exceeding the previous high of $7.50. The contract closed 7.25 cents higher at $7.39 a bushel.
The $7.50 record, set in March 1996, was for a nearby contract. CBOT December wheat is the second-month contract, but the record still stood as the all-time high and was seen as an important price target, analysts said.
Adjusted for inflation, $7.50 in 1996 is equal to $9.96 in 2007, according to the consumer-price index.
CBOT wheat rallied after the Agriculture Department reported solid weekly export sales. Despite soaring prices, importers have snapped up U.S. wheat at a rapid pace this summer amid production problems in Europe and the Black Sea region.
Strong demand is expected to continue in the near term as world buyers wait to see how much wheat the Southern Hemisphere will produce, traders said. Following a severe drought last year, Australia, a major world exporter, is off the global market until it can harvest its wheat this fall.
"The buying has been incredible," said John Kleist, an analyst with Kleist Ag Consulting.
A new import tender from India offered further support for CBOT prices. U.S. wheat doesn't meet India's strict phytosanitary requirements, but the tender still removes supplies from the world market, traders said.
World 2007-08 wheat ending stocks are at their lowest since 1979-80, according to an updated forecast from the International Grains Council.
Statistics Canada slashed its projection for 2007-08 all-wheat production. The new estimate was below trade expectations and seen as bullish because it implied less competition from Canada in exports, an analyst said.
Looking forward, $8 is the next major price target for the CBOT's December wheat contract, but getting there depends on importers continuing to book supplies at higher prices, Mr. Kleist said.
Demand for U.S. wheat could slow if major importers start to see improvements in the Australian and Argentine crops, he said. Parts of the countries' wheat-growing regions have suffered from dryness. |
