BLBG: Wheat Gains as Demand for High-Quality U.S. Supplies Increases
Wheat rose for a third straight day on speculation demand for U.S. grain will increase as competing exporters run low on supplies of high-quality grain used in making food.
Importers have committed to buy 21.2 million tons of U.S. wheat since the beginning of the marketing year on June 1, down 27 percent from the same period a year earlier, government data show. Sales have waned as buyers turned to suppliers including Russia and Ukraine. Wheat prices, down 34 percent this year, will improve if demand for U.S. grain increases, analysts said.
“There’s a lot of strong world demand out there,” said Larry Glenn, an analyst at Prime Ag in Quinter, Kansas. “We’re just missing out on any of that business. The market is thinking those countries are going to run out of high-quality milling wheat, and it’s going to be our turn. That’s why we’ve kept our strength in the market.”
Wheat futures for March delivery rose 4.75 cents, or 0.8 percent, to $5.80 a bushel at 9:58 a.m. on the Chicago Board of Trade. The most-active contract still has plunged 57 percent from a record $13.495 on Feb. 27.
Farmers in the U.S. southern Great Plains including Kansas, the largest producing state, Oklahoma and Texas, harvest high- protein hard-red winter wheat, which is used to make staple foods such as bread and pasta. Much of the grain coming from the Black Sea region, including Russia and Ukraine, has been lower quality and used in feed, analysts said.
Wheat Imports
Syria’s state-owned grain buyer, known as Hoboob, said today it plans to buy 200,000 metric tons of milling wheat. Egypt, the largest buyer of U.S. wheat, yesterday purchased 100,000 tons of the grain from Russia, and Pakistan said it bought 500,000 tons of wheat from overseas exporters without releasing details of the transaction.
Trading volume will be lower than normal through Jan. 1 because of the Christmas and New Year’s holidays, Glenn said. With trading limited, large purchases or sales may have a bigger influence on prices during the next two weeks, he said.
Wheat is the fourth-biggest U.S. crop, valued at $13.7 billion in 2007, behind corn, soybeans and hay, government data show.
