Melbourne: Wheat rose to within 0.3% of a record in Chicago after India bought more of the grain and on speculation that supplies from Russia and Australia, accounting for about a quarter of global exports, will be lower than expected.
India, the world’s second biggest consumer of wheat, on Monday bought 50% more grain than offered by suppliers to rebuild its emergency reserves.
Australia’s wheat output may be 18% less than a government estimate because of dry weather, a survey showed, and Russia said it may curb exports.
“Add them all together and we continue to march higher,” said Brett Cooper, senior client adviser, commodities, with broker MF Global Australia Ltd. “Until immediate supply concerns are fixed, there’s no reason why we should stop at the moment.”
Wheat rose to a record in Chicago last week as global consumption outpaces supply and inventories head for their lowest level in more than a quarter of a century.
Prices have surged 54% in the past three months, increasing costs for companies including Premier Foods Plc., the maker of Hovis bread.
Wheat for delivery in December rose as much as 30 cents, or 3.9%, to $8.06 (Rs330.26) a bushel on the Chicago Board of Trade in after-hours electronic trading. The contract was at $8.05 a bushel in London. Prices reached a record $8.07 on 31 August.
Output in Australia may be 18.5 million tonnes (mt), a Bloomberg survey revealed. That compares with the government’s June estimate of 22.5mt and last year’s drought-reduced harvest of 9.8mt.
The US agriculture department ranks Australia as the world’s third largest wheat exporter in the year through June, with shipments rising to 14.5mt, from 11.5mt in the previous year.
Russia is considering sales from state inventories, as well as export duties and quotas, to hold down domestic grain prices.
The country was the fifth biggest wheat exporter in 2006-07, according to the US agriculture department.
Russia is considering sales from state inventories, as well as export duties and quotas, to curb domestic grain prices. A working group comprising the agriculture ministry, the Grain Union and the Flour and Cereal Producers’ Union will report by mid-September on the outlook for wheat. The group will next meet on 11 September.
Russia was the fifth-biggest wheat exporter in 2006-07, according to the US department of agriculture.
Glencore International AG, Toepfer International and Starcom won contracts to supply 795,000 tonnes of wheat to India—more than the 530,000 tonnes offered by suppliers at a tender last week, a government official, who didn’t want to be identified, told reporters in New Delhi on Monday.
“People are falling on their sword a bit, saying I just have to buy now,” Tobin Gorey, a commodity strategist with Commonwealth Bank of Australia Ltd, said from Sydney. “People have waited for it to come back and it hasn’t happened yet.”
Premier Foods Plc., based in St. Albans, England and the UK’s biggest maker of cakes, on Tuesday said it managed to pass on higher costs to customers. Should the surge in prices persist, further increases will be needed, the company said in a statement. BLOOMBERG