Wheat Poised for Longest Rally in 14 Months


The following article is from Bloomberg Businessweek:

Wheat Poised for Longest Rally in 14 Months on Import Outlook

By Tony C. Dreibus and Luzi Ann Javier

Wheat rose in Chicago, set for the longest winning streak since November 2009, as North African importers boost purchases to curb food inflation amid riots over high prices.

Egypt purchased 659,800 metric tons of U.S. wheat from the start of the marketing year on June 1 through Jan. 6, U.S. Department of Agriculture data show. That’s up from 366,000 tons last year, according to the USDA. Tunisia bought 100,000 tons of wheat on Jan. 24, Reuters reported. Elevated food prices contributed to outbreaks of rioting in both countries.

“In the case of wheat, prices are reflecting food-security issues we’ve seen recently,” said Erin FitzPatrick, an analyst at Rabobank in London. “There’s certainly some correlation with a lot of those countries coming into the market and saying they want to increase their stock levels.”

Wheat for March delivery added 9.25 cents, or 1.1 percent, to $8.475 a bushel at 11:44 a.m. London time on the Chicago Board of Trade. The grain touched $8.4825, the highest level for a most-active contract since Aug. 6, as it advanced for a seventh day.

Milling wheat for March delivery rose 3.50 euros, or 1.3 percent, to 266 euros ($364.36) a ton on NYSE Liffe in Paris. That was the day’s high and the highest level since March 27, 2008. Prices gained for a seventh day in eight.

Tunisia, Jordan

“Importers are rushing into the market” because they expect the U.S. will remain the only reliable supplier as competing exporters struggle to boost output, said Ker Chung Yang, a Singapore-based analyst at Phillip Futures Pte. “What happened in Egypt, Tunisia and Jordan will prompt neighboring countries to import more wheat to contain food inflation.”

In Egypt, the world’s biggest wheat importer, three people set themselves on fire and thousands protested against President Hosni Mubarak’s government. In Algeria, tied with Indonesia as the world’s third-largest wheat buyer, three people were killed and 420 injured in clashes with police this month during rallies against high food prices and a lack of public housing. In Jordan, opposition groups have held several peaceful rallies against the government.

Lebanon, Algeria and Bangladesh have issued tenders to buy wheat since Jan. 21. Chicago prices surged 72 percent in the past year as drought slashed output in Russia and Eastern Europe and floods in Australia and Canada eroded the quality of crops.

Corn for March delivery gained 0.9 percent to $6.4975 a bushel in Chicago. March-delivery soybeans rose 0.4 percent to $13.7975 a bushel.

“Corn hasn’t seen any demand rationing” even as prices jumped 72 percent in the past six months, Rabobank’s FitzPatrick said. “Prices have a big job to do to encourage Northern Hemisphere and U.S. farmers to plant higher acreage. For competing crops — corn, beans, wheat and even cotton — supply and demand fundamentals are tight across the board.”

–With assistance from Jeff Wilson in Chicago, Rudy Ruitenberg in Paris, Rodrigo Orihuela in Buenos Aires and Yu-Huay Sun in Taipei. Editors: Dan Weeks, John Deane.

To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Tony Dreibus in London at tdreibus@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Source:  Bloomberg Businessweek

Posted by Haylie Shipp


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