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Wheat hits record on supply concernsBy STEVENSON JACOBS updated 1:46 p.m. ET Feb. 6, 2008By STEVENSON JACOBSAP Business WriterThe Associated Pressupdated 1:46 p.m. ET Feb. 6, 2008
NEW YORK - Wheat futures reached a new record high Wednesday as investors bet that tightening U.S. supplies and poor harvests around the globe will push grain prices higher _ worsening food inflation.
Other agriculture commodities spiked on the rally, with soybean and corn futures both hitting records. Precious metals rose broadly, while energy futures fell.
Wheat prices have trekked relentlessly higher as global supplies have shrunk. Smaller-than-expected harvests around the world, due partly to dry weather, have left stockpiles depleted even as demand continues unabated. That's brought an increasing number of foreign buyers to the U.S. market seeking dwindling supplies of milling-quality wheat used in bread, pasta and other foods.
U.S. wheat exporters have sold more than 15 million bushels a week in seven of the last 11 weeks, well above the U.S. Department of Agriculture's weekly target of about 1 million bushels a week.
"Today's trade is all about wheat. There's an extremely short supply of wheat of superior quality, and some end users will pay whatever it costs to get it," said Jay Calhoun, analyst with Walsh Trading.
Wheat for March delivery jumped 30 cents to hit an all-time record of $10.33 bushel in overnight trading on the Chicago Board of Trade. That met the exchange-allowed daily limit, halting trading for the day.
Wheat sales have surged past the historic average as buyers scramble to lock down supplies. World wheat inventories are headed for the lowest level in nearly three decades. Dry, hot weather in wheat-growing countries, most recently India, Canada and Argentina, have added to the tightness.
Higher wheat prices won't immediately translate into a spike in retail prices for bread, cereal, cookies and other products, experts say. That due partly because companies like Kellogg Co., General Mills Inc., and Kraft Foods Inc. typically protect themselves from price volatility with long-term supply contracts. But analysts say consumers should expect that higher wheat prices eventually will work their way into the grocery aisle.
Wheat's run higher lifted other agriculture product prices, as well. March soybeans spiked 41 cents to $13.64 a bushel, after earlier hitting a record $13.73. March corn jumped 11.25 cents to $5.205 a bushel. Corn earlier hit a record $5.2875 a bushel.
Meanwhile, precious metals rebounded Wednesday as investors went bargain hunting following sharp drops in gold and platinum.
Gold for April delivery gained $17.30 to fetch $907.60 on the New York Mercantile Exchange. Gold plunged $19.10 on Tuesday to its lowest level in two weeks.
Platinum recovered as well, with the April contract hitting a new record of $1,822.60 an ounce before easing back to $1818, still up $32.50. March silver added 23 cents to $16.575 an ounce, while March copper rose 9.6 cents to $3.3080 a pound.
In energy markets, oil futures fell after the U.S. government reported unexpectedly large increases in supplies of crude oil and gasoline and a surprise increase in stocks of heating oil.
Light, sweet crude for March delivery fell $1.34 to $87.07 a barrel on the Nymex after earlier dropping as low as $86.66, its lowest level in two weeks.
Other energy futures also traded lower. March gasoline fell 2.62 cents to $2.2385 a gallon on the Nymex, and March heating oil fell 2.56 cents to $2.4209 a gallon.
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