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Wheat prices breach US$12 after biggest gain since 2002

Wheat prices breach US$12 after biggest gain since 2002

Chicago wheat prices rose by the most in more than five years, breaching US$12 a bushel for the first time as investors poured money into agricultural commodities on signs production isn't keeping pace with demand.
Global wheat stockpiles will probably fall to a 30-year low this year, while corn inventories are headed for the lowest since 1984, the U.S. Department of Agriculture said February 8. Almost US$1.5 billion flowed into farm commodities in the week to February 19, investment bank UBS AG said in an e-mailed report on Monday.
Wheat prices have more than doubled in the past year as adverse weather reduced output in Europe, Canada and Australia, raising the cost of bread, cakes and cookies. The gains have stoked food inflation around the world and made central bankers cautious about cutting interest rates to stimulate growth.
"Speculators keep jumping into the market as supplies are very tight globally, especially spring wheat," said Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co. Dry conditions in some wheat-producing areas in northern China also lent support, he said.
Wheat for May delivery rose by the daily limit of US$0.90, or 8 percent, to US$12.145 a bushel in after-hours electronic trading on the Chicago Board of Trade, the biggest one-day percentage gain since October 2002. The contract traded at US$11.99 a bushel yesterday.
The exchange expanded its daily limit by 50 percent after the contract surged by the 60-cent maximum Monday, leaving buy orders outstanding.
Global wheat stockpiles may fall to 109.7 million metric tons by May 31, while corn inventories may decline to 101.9 million tons as of October 1, the U.S. government estimated.
U.S. inventories of wheat will drop to 272 million bushels, or 7.4 million tons, the lowest for the end of the marketing year since 1948, according to the Department of Agriculture. Hard-red spring varieties, traded in Minneapolis, are in short supply as dry weather curbed output last year in the U.S. and Canada.
On the Minneapolis Grain Exchange, wheat for May delivery advanced US$1.35, or 7.9 percent, to US$18.4325 a bushel. The March contract, which has no limit because it is the closest to delivery, rose as high as US$24.26 a bushel, after Monday becoming the first U.S. wheat contract to top US$20 a bushel.
On the Kansas City Board of Trade, hard-red winter wheat also rose as much as the 90-cent limit, or 7.7 percent, to US$12.65 a bushel before trading at US$12.46 yesterday.


Updated : 2021-06-21 10:00 GMT+08:00