Wheat rose to a record, extending a rally that began in March, on signs of dry weather in Ukraine and Australia may hurt production, reducing world supplies already expected to be the lowest in 26 years.
Ukraine, the world’s seventh largest wheat exporter, will ship 58% less grain this year after a three-month drought, the country’s agriculture minister said Thursday.
Hotter-than-normal weather is also expected to reduce production in Australia.
“Ukraine is fairly well-known, but more important is the southern hemisphere news,” said Larry Glenn, owner of Glenn Commodities in Wichita, Kansas. Australia has “a long ways to go until they get the wheat in the bin. At least it’s not going to be the disaster we saw last year.”
The price also rose as India said it will buy more wheat this year to raise “emergency” reserves to keep food prices lower. The government-owned State Trading Corp. received bids for 530,000 tonnes of wheat for as much as $434 (Rs17,880) a tonne. Countries are willing to pay record prices as they don’t want to end up with diminished stockpiles like India, the second-biggest user of the grain behind China, Glenn said.
“A lot of need has surfaced,” Glenn said. “We’ve seen some countries get scared and grab supplies to meet their food needs. It’s scary to see a big country like India having to scramble. I think people watch and learn from other people’s mistakes.”
Wheat futures for December delivery rose 20.25 cents, or 2.7%, to close at $7.585 a bushel on the Chicago Board of Trade. BLOOMBERG
Madelene Pearson in Melbourne, Maria Kolesnikova in Moscow and Daryna Krasnolutska in Kiev contributed to this story.