BLBG: Wheat Climbs to Four-Month High as Rains Cut Quality of Australian Grain
Wheat climbed to the highest price in four months on concern that unusually heavy rainfall in Australia will delay the harvest and reduce grain quality. Corn and soybeans declined.
Wheat for March delivery advanced as much as 2.4 percent to $7.98 a bushel, the highest level for the most-active contract since Aug. 6 on the Chicago Board of Trade, and traded at $7.9325 at 10:57 a.m. in Singapore. Exports from Australia, the world’s fourth-largest shipper, will be curbed as heavy rains and floods damage crops, said Commonwealth Bank of Australia.
Commonwealth Bank cut its estimate for the country’s wheat exports to 14 million metric tons in 2010-2011, from an earlier 16 million tons. “Many in the industry suggest the disruptions to the harvest this year and the implications for grain quality are the worst in a lifetime,” Luke Mathews, a commodity strategist at the bank, said in a report yesterday.
“Poor crop weather in Australia has pushed the market higher, increasing concern over tight global supply,” Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul, said today by phone.
Futures have surged 65 percent since June 30 as drought in Russia and floods in Canada cut output, while dry weather in the U.S. Great Plains threatened winter crops. Heavy rains in Australia, caused by a La Nina weather event that cools parts of the Pacific Ocean, helped drive wheat futures 13 percent higher in Chicago last week.
Crop Downgrades
Rains were forecast in the next seven days, which may delay harvesting in most of the east-coast planted areas by at least a month, Mathews said. The Australian Bureau of Agricultural and Resource Economics, in a report due on Dec. 7, may lower its estimate of the nation’s harvest from 25 million tons and pare its forecast on exports from 18 million tons, Mathews said.
Lower shipments may drive up wheat prices as the U.S. Department of Agriculture forecast a 22.9 million-ton shortfall in global output this season, the first deficit in three years.
The wet weather may cause more than 10 million tons of Australia’s wheat crop to be downgraded to lower-protein classes and to feed quality, Michael Creed, an agribusiness economist at National Australia Bank Ltd., said by phone today. The bank estimates the total crop at 23.8 million tons.
Corn for March delivery dropped as much as 0.7 percent to $5.6975 a bushel in Chicago before trading at $5.7125. The price gained 3.7 percent last week, a second straight gain.
Soybeans for January delivery fell 0.4 percent to $12.95 a bushel. The contract gained 5 percent last week, the biggest rally since mid-October.
To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
