Spring wheat futures at the Minneapolis Grain Exchange soared to a record high $14.33 per bushel on Monday on fund buying and on aggressive demand for a tight supply of top-quality high-protein spring wheat, traders said.
Traders and analysts also said the Minneapolis wheat market was attempting to buy wheat acres from soybeans for the 2008 US crop season. "The Minneapolis contract showed a lot of strength and is ahead of beans, trying to keep from losing something like a million acres to soybeans this year," said Tim Hannagan, analyst for Alaron Trading. MGE wheat closed 5 cents higher to up the 30 cent per bushel trading limit, with March limit-up at $14.33 per bushel. "It's a race, and the rabbit right now is Minneapolis wheat, wheat was leading the charge today," Hannagan said.
March rallied to a record high $14.33, the highest price ever traded for a US wheat futures contract. Traders and analysts have said that buying of spring wheat would continue as the stockpile of that commodity dwindles even as export and domestic sales remain strong.
"Exports are strong for everything, it just won't back off," said Jerry Gidel, analyst for North America Risk Management Inc Gidel said he was trimming bushels from his estimate for 2007/08 US ending stocks for wheat, corn and soybeans because of the continued aggressive export sales of each.
There were some concerns that spring wheat supplies could be exhausted before the next harvest begins in August, with traders saying that high prices were one way to ration demand. Global wheat supplies, however, were expected to increase later this year due to a surge in plantings. Traders and analysts polled by Reuters said they expected CBOT wheat prices for the spot contract to ease by the end of this year to $7.72 per bushel.
They expected US all-wheat seedings in the United States to rise to 63 million acres this year from 60.4 million last year, boosted by high prices. Iraq is expected to face its worst wheat shortages in years, aggravated by a delay in purchasing that has clouded deliveries for the rest of the year, industry officials told Reuters.