Wheat prices climbed to their highest in four months on concern that unusually heavy rainfall in Australia would delay the harvest and reduce grain quality.
Wheat for March delivery advanced as much as 2.4 percent to US$7.98 a bushel, the highest level for the most-active contract since Aug. 6 on the Chicago Board of Trade and traded at US$7.9325 at 10:57am in Singapore yesterday. Exports from Australia, the world’s fourth-largest shipper, will be curbed as heavy rains and floods damage crops, Commonwealth Bank of Australia said.
Commonwealth Bank cut its estimate for the country’s wheat exports to 14 million tonnes in this year and next year, from an earlier 16 million tonnes.
“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 yesterday by telephone.
Futures have surged 65 percent since June 30 as drought in Russia and floods in Canada cut output, while dry weather in the US 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.
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 today, may lower its estimate of the nation’s harvest from 25 million tonnes and pare its forecast on exports from 18 million tonnes, Mathews said.
Lower shipments may drive up wheat prices as the US Department of Agriculture forecast a 22.9 million tonne shortfall in global output this season, the first deficit in three years.
The wet weather may cause more than 10 million tonnes 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 telephone yesterday.
The bank estimates the total crop at 23.8 million tonnes.
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