Wheat futures on the Chicago Board of Trade hit a record high on Monday boosted by renewed export demand, traders said. CBOT December wheat in electronic trade was up 22 cents at $8.65-per bushel, after hitting $8.71-3/4.
Iraq issued on Sunday a new tender to buy at least 50,000 tonnes of wheat only days after the country purchased 200,000 tonnes of wheat. "Current prices are irrational. Flour millers may have to raise their product prices soon," said a Seoul-based trader.
Wheat prices have nearly doubled since April as commercial buyers scrambled to secure exports amid outlooks for dwindling world supplies. Egypt, Morocco, Algeria, Iraq and India were among those booking large quantities of wheat.
The US Department of Agriculture has projected that world wheat stocks will drop to 114.8 million tonnes by the end of the 2007/08 marketing year, a 26-year low, following poor weather this year in parts of Europe and the United States.
Dry conditions in Argentina and Australia have raised new concerns, threatening wheat production in the Southern Hemisphere. Analysts said wheat prices could rise further in the near term but that investors should be careful about a possible sharp correction next summer.
"Right now, there is no indication that there is any demand decline. So, can wheat prices rise to $9 or $10? I do not rule that out," Hussein Aladdin, Global Commodity Research Strategist for Morgan Stanley, said late on Sunday. High prices of wheat, however, will ultimately lead farmers to plant more wheat and less corn or soyabean, which will lead to lower wheat prices next year, he said.