Chicago wheat futures skyrockets as Russia may restrict wheat export

14:56, August 05, 2010      

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Chicago wheat futures skyrocketed Wednesday on speculations that Russia would curb its grain exports as the worst drought in 130 years may cause domestic shortages. Corn also ended much higher on rising exports demand amid high feed wheat prices.

September wheat surged 45.75 cents, or 6.7 percent, to 7.2575 U. S. dollars per bushel. December corn rose 11.0 cents, or 2.7 percent, to 4.15 dollars per bushel. November soybean climbed 6.25 cents, or 0.6 percent, to 10.2425 dollars per bushel.

The UN's Food and Agriculture Organization slashed its 2010 world wheat supply forecast on Wednesday by 25 million tons, or about 4 percent, due to Russia's drought.

Trader noted that the record high temperatures and draught in Russia is going to persist through August, and there are some uncertainties in the market concerning whether or not the winter wheat crop in Russia would get planted around Sept. 1, and whether or not there will be adequate subsoil moisture to make it worth planting. Wheat prices rebounded strongly on Wednesday, supported by the fund-buying as well as short-covering throughout the session, despite a rally in the dollar.

Trader noted that buying by funds and commission houses sparked by massive gains in wheat were the main catalyst behind corn's strong rally on Wednesday, meanwhile, the excessive lingering heat in parts of U.S. Corn Belt as well as investor's speculation that buyers of livestock feed would purchase corn as the cheaper alternatives to wheat both contributed to lift corn price.

USDA announced on Wednesday a sale of 121,000 tons of soybeans to China for delivery in the 2010/11 marketing years, which has pushed up soybean prices, but soybean trimmed earlier gains prior to the close, pressured by profit-taking.



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