By Tom Polansek
Of DOW JONES NEWSWIRES
CHICAGO (Dow Jones)–Wheat prices are poised to end a three-day losing
streak on global weather worries and spillover support from a rally to nearly
two-year highs in corn.
Traders remain nervous about tight world supplies of wheat after a severe
drought devastated Russia’s crop this summer and prompted the government to ban
grain exports. Persistent dryness threatens to derail planting of the next
crop, which will be harvested next year, while other countries are struggling
with their own weather problems.
Tightened supplies of wheat have increased demand for corn, and corn prices
on Thursday surged above the psychologically important price of $5 a bushel on
reduced expectations for the U.S. crop. Corn’s rally sparked a recovery in
wheat as fears about world grain production intensify.
Wheat prices in early August brushed against two-year highs this summer
after Russia, a major producer, said it was halting grain exports because of
crop losses. Prices are still up 70% from June lows, despite a setback during
the past month.
“It’s basically the corn market that is the big gun, that is the leader,”
said John Kleist, a broker and analyst at Allendale, an agricultural research
and brokerage firm in Illinois.
Soft red winter wheat for December delivery is called to open 10 cents to 14
cents a bushel higher on the Chicago Board of Trade, according to traders. This
most-active contract overnight soared 13 3/4 cents, or 1.9%, to $7.33 a bushel.
A rally in European wheat prices accompanied the gains in U.S. grains.
French wheat hit a fresh two-year high Friday, boosted by fears of worsening
prospects for the global harvest.
Cool, wet weather is unfavorable for crop quality in Canada, where farmers
are still struggling to harvest wheat due to excessive rains. Harvest of all
crops in Saskatchewan last week advanced only one percentage point to 14%
complete, well below the five-year average of 51% for that time of year.