Bloomberg News

Wheat Jumps Most in a Year on Bets U.S. Exports Will Rebound

October 11, 2011

Oct. 11 (Bloomberg) -- Wheat surged the most in a year on speculation that demand for grain from the U.S., the world’s biggest exporter, will increase after futures touched a three- month low.

Prices on the Chicago Board of Trade tumbled 23 percent in September as concern mounted that the world economy will falter as global wheat output gains. Russia said today it may impose export duties on grain if shipments top 23 million metric tons. The country, which lifted a 10-month ban on exports in July following last year’s drought, has shipped 10.7 million tons.

“When you look at all the prices across the world, the U.S. is reasonably competitive,” Darrell Holaday, the president of Advanced Market Concepts in Wamego, Kansas, said in a telephone interview. Russia is “in the back of everyone’s mind,” he said. “The minute they stop selling wheat, if that were to happen, it would certainly change the marketplace.”

Wheat futures for December delivery jumped 8.1 percent to settle at $6.6075 a bushel at 1:15 p.m. on the Chicago Board of Trade. The gain was the biggest for a most-active contract since Oct. 8, 2010, when the U.S. Department of Agriculture cut supply forecasts. The agency releases its monthly report tomorrow.

On Oct. 3, wheat touched $5.9675, the lowest since July 1. The price has dropped 17 percent this year.

Russia’s possible restriction on exports is aimed at controlling food inflation and ensuring domestic supplies, Viktor Zubkov, the first deputy prime minister, said.

Egypt, the world’s biggest importer, has favored supplies from Russia over the U.S. since July. The USDA expects Russia will produce 56 million tons of this year, 35 percent more than a year earlier.

Wheat is the fourth-largest U.S. crop, valued at $13 billion in 2010, behind corn, soybeans and hay, government data show.

--With assistance from Marina Sysoyeva in Moscow and Maria Kolesnikova in London. Editors: Patrick McKiernan, Steve Stroth

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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