Friday, July 30, 2010

"Wheat Rises to Highest Price 14 Months as Russia Drought Crimps World Crop" and "Biggest Monthly Advance Since 1973"

Two from Bloomberg, who seem to be paying attention:
Wheat rose to the highest price in almost 14 months as droughts in exporting countries including Russia threatened to reduce supplies.

Global inventories will fall to 192 million metric tons by June 30, 2011, down 2.5 percent from a year earlier, the London- based International Grains Council said yesterday. Russia’s harvest will drop 19 percent to 50 million tons this year, the IGC said. Drought has damaged 32 percent of Russia’s planted area, the government said.

“With the news that’s coming out of Russia, stocks are tightening up all around,” said Jason Britt, the president of Central States Commodities Inc. in Kansas City, Missouri. “Any decreases in the crop will come to center stage.”

Wheat futures for September delivery rose 26.25 cents, or 4.2 percent, to $6.5375 a bushel at 1:01 p.m. on the Chicago Board of Trade, after touching $6.615, the highest level for a most-active contract since June 3, 2009. Prices are up 9.6 percent this week and 36 percent this month as prospects dimmed for crops....MORE
And a little history:
Wheat Surges, Heading for Biggest Monthly Advance Since 1973, on Drought
Wheat rose for a fourth day in Chicago, heading for the biggest monthly gain in more than three decades, on concern that drought in Russia and parts of Europe will crimp global supply.
September-delivery wheat gained 1.7 percent to $6.38 a bushel on the Chicago Board of Trade at 2:14 p.m. Paris time, the highest price for a most-active contract since June 2009. The contract is set for a 33 percent monthly jump, the biggest since August 1973.

World wheat stockpiles may slide 2.5 percent to 192 million metric tons by June 2011 as “prolonged dry weather” hurts the outlook for crops in Russia, Kazakhstan, Ukraine and the European Union, the International grains Council said yesterday, reversing a June forecast for higher inventories.
“Russia is spurring on the market,” Maxime Jouenne, an analyst at Paris-based farm adviser Agritel, said today. “The market is super-nervous, and operators are looking at the Russia situation,” including possible export restrictions, he said.

Russia declared emergencies in 27 crop-producing regions, four more than a week earlier, because of the worst drought in at least a decade. Dryness damaged at least 10.3 million hectares (25.5 million acres) of crops, the government said today, up from 10 million hectares a week ago.
Sale to Soviets

Chicago wheat prices more than doubled in 1973, rising 31 percent in July and 42 percent in August, after the U.S. sold about 440 million bushels (12 million tons) of subsidized wheat to the Soviet Union in July and August 1972.

The so-called Russian Wheat Deal was equivalent to 30 percent of average annual U.S. wheat production in the previous five years, according to a 1973 report by the Federal Reserve Bank of St. Louis. The sale was criticized after a “sharp increase” in U.S. food prices, the report shows....MORE 
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