Spring wheat futures on the Minneapolis Grain Exchange settled sharply higher on Tuesday, reaching new 11-year highs on a big drop in Canadian wheat plantings, traders said. Declining US spring wheat ratings added support.
Minneapolis July spring wheat settled up 20 cents at $6.20 per bushel after reaching $6.30, up the 30-cent daily trading limit and the highest spot price for spring wheat in 11 years.
Deferreds ended up 20 to down 5 cents, with September up 19 cents at $6.12-1/2 and December up 16-1/4 at $6.21-1/4. Contract highs were hit in the front four months. Volume was heavy, estimated by the exchange at 10,436 futures.
Funds bought roughly 1,500 contracts on the day, while Country Hedging sold 1,000 December, traders said. Statistics Canada surprised the market on Tuesday by reporting 2007 Canadian all-wheat plantings at 21.7 million acres, well below trade estimates for 23.4 million and Statscan's March estimate of 23.8 million.
"A 2-million-acre reduction is quite a bit. They may bump up the number after harvest, but it's still a significant reduction from what we were thinking," one Minneapolis trader said.
The market drew additional support from a drop in US spring wheat ratings. USDA's weekly crop progress report late Monday showed 79 percent of the crop was rated in good to excellent condition, down from 85 percent a week earlier. US winter wheat ratings also declined, with 48 percent of that crop rated good to excellent, down from 50 percent the previous week.
The US winter wheat harvest was 22 percent complete, up from 11 percent the previous week but lagging the five-year average of 36 percent. Also bullish was news that India issued a tender to import 1 million tonnes of wheat. US traders said the United States was not likely to get any of the business, but the tender comes at a time of tightening world wheat stocks.
In Europe, showers have spread across much of France, heightening worries about the quality of wheat and barley harvests. Farmers in Ukraine, by contrast, have been pleading for rain to salvage some of their wheat crop, with southern and central regions facing the worst drought in a century.