Wheat Hits New Highs as World Appetite Grows and Supply Shrinks

  • In Business
  • 2021-10-22 17:08:37Z
  • By Bloomberg

(Bloomberg) -- Spring wheat touched $10 a bushel for the first time since 2012 as hot and dry crop conditions from North America's prairies to Russia's Urals leaves the world short on grain used to make everything from croissants to pizza crusts.

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Weather woes are bumping up against a growing appetite for wheat of all types. The U.S. expects overall world stockpiles to end the season at a five-year low. The scarcity is boosting demand for hard red winter wheat, which was more abundant this year than other varieties. Those futures jumped to a seven-year high on Friday.

Attention is now turning to 2022 and the early outlook is triggering concern. A new three-month forecast from the U.S. predicts more drought in key growing regions for both spring and hard red winter wheat. That could cause growers who are already facing higher costs for basic farm products to hold back on big crop investments.

"With the dryness, combined with fertilizer prices up double year on year and availability concerns, many wheat farmers will be 'spoon feeding' their crop," Justin Gilpin, chief executive officer of the Kansas Wheat Commission, said in an interview. It "makes 2022 production harder to estimate at this time."

The prospect of further supply problems next year raises the chance that wheat prices will continue to surge upward and worsen worldwide food inflation. The latest United Nations figures show food prices at a decade high amid harvest setbacks and supply chain disruptions.

Higher wheat prices also could boost the cost of livestock feed when China has been looking for alternatives to corn and soybeans to feed help feed its hog herds.

Most-active spring wheat futures in the U.S. climbed 1.9% to $10.0375 a bushel as of 12:45 p.m. New York time. Prices have soared almost 70% this year.

Hard red winter wheat, which is widely used for all-purpose flour and also is a potential substitute for spring wheat, jumped 2.5% to $7.6625 a bushel. They earlier reached $7.745, the highest since May 2014.

Benchmark soft winter wheat, an ingredient in cakes, cookies and crackers, rose 1.5% to $7.525 a bushel in Chicago.

In other crops, corn rose slightly while soybeans and soy oil fell.

(Wheat Rises as Spring Variety Hits $10 for First Time Since 2012)

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©2021 Bloomberg L.P.


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