Weather worries push wheat higher
U.S. wheat futures rose 1.9% to a one-month closing high Wednesday, buoyed by concerns about unfavorable weather for crops growing in the U.S. and abroad.
Traders cited concerns ranging from dry weather in the central U.S. to too much rain in Europe and Argentina.
"We've got serious problems with production in the Southern Hemisphere and potential problems in the Northern Hemisphere," said Louise Gartner, an analyst with brokerage Spectrum Commodities in Beavercreek, Ohio.
Chicago Board of Trade December wheat futures settled up 17 cents at $8.94 a bushel. Kansas City Board of Trade December wheat settled up 12 cents, or 1.3%, at $9.31 1/2 a bushel. MGEX December wheat rose 11 3/4 cents, or 1.2%, at $9.59 3/4 a bushel.
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The new U.S. crop of winter wheat in Kansas and other Great Plains states is growing in extremely dry soil, after a severe drought this past summer wiped out ground moisture across the country's midsection. Winter wheat, widely used in bread products, is planted in the fall and harvested in the spring and early summer.
A federal government report on Monday said just 39% of the nation's winter-wheat crop was rated in "good" or "excellent" condition--the lowest level for this time of year since the Department of Agriculture started releasing the data in 1986. Last year at this time, the figure was 49%.
Meanwhile, rain in England and France is delaying the planting of new winter-wheat crops there. Some farmers in the region can't plant wheat until they make room by harvesting their sugarbeet crops, which is difficult to do in wet soil, said Mike Palmerino, a senior meteorologist in Woburn, Mass., for private forecaster Telvent DTN.
Traders are also worried that excessive rain in Argentina in the past few weeks may have caused crop diseases, reducing the quality of the country's crop so that more of it will be suitable only for use in animal feed, instead of for human consumption.
And in Australia, traders say, recent rains in eastern parts of the country may also lower the quality of crops. Australia this year is expected to be the world's third-largest wheat exporter after the U.S. and Canada.
Also on Wednesday, some traders bought U.S. wheat futures because the benchmark contract on Tuesday closed above its 50-day moving average, which some saw as a signal that prices would keep rising.