Wheat prices climb to record above $10 per bushel on depleted
VILLAGRAN, Capital Press 12/17/07
NEW YORK (AP)
- Wheat prices surged above $10 a bushel for the first time ever
Monday amid concerns that strong demand globally could result in a
grain shortage in the United States next year - worsening food
Other commodities markets mostly declined, with energy, other
agricultural futures and metals moving lower.
Wheat supplies in the U.S. have dwindled this year as one wheat
crop after another around the world has been damaged by poor
weather, most recently in Australia and Argentina. That's sent
buyers scrambling for stockpiles at any cost. U.S. wheat exporters
already have sold more than 90 percent of the 1.175 billion
bushels the U.S. Department of Agriculture expects will be
exported during the whole marketing year, which ends in June 2008.
Wheat prices crossing the $10 a bushel threshold 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., ConAgra Foods 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 will eventually work their way
into the grocery aisle.
A bushel of wheat for March delivery surged to a record $10.095 on
the Chicago Board of Trade early in the day before shedding 13.5
cents to settle at $9.66 a bushel as profit-taking set in. Wheat
prices have hit a record high each of the past three trading
sessions and have doubled since the start of the year, when wheat
traded for about $5 a bushel.
Food prices rose at a 4.1 percent annual rate in the three months
ended in November largely due to higher milk, egg and meat prices,
according to the Labor Department's latest index of consumer
prices. Wheat, corn and soybeans are used to feed livestock; as
those costs go up, so does the retail cost to consumers.
The worldwide wheat shortage has contributed to the inflation, but
so has a host of other factors, said Darrel Good, agricultural
economist with the University of Illinois. Biofuels production has
pushed up corn and soybean prices. Meanwhile, the price of
vegetable oils used in packaged foods and biodiesel has followed
the price of crude oil sharply higher.
"It's a combination of all of the above factors, which are coming
together at this point," Good said.
Unprecedented demand for agricultural products from fast-growing
countries including China and India has exacerbated the supply
crunch. In the market panics of previous years, prices would rise
to a level that developing countries couldn't afford. But it's not
clear where that peak level lies now, said Mark Schultz, chief
analyst with Northstar Commodity.
"Globally, other economies are much stronger. China is up
significantly, India is up significantly, and Russia's economy is
much stronger," he said. "So when we used to run wheat prices up
high, years ago, they didn't have the money and they didn't buy
much of the product. Now prices run up and they're still buying."
March corn added 0.5 cent to $4.3875 a bushel, and January
soybeans fell 0.25 cent to $11.5675 a bushel on the CBOT. Both
corn and soybeans have recently touched record highs.
Beef futures ended mixed and pork futures fell on the Chicago
February live cattle rose 0.15 cent to 95.62 cents a pound;
January feeder cattle shed 0.13 cent to $1.0367 a pound; February
lean hogs dipped 0.92 cent to 59.25 cents a pound; February pork
bellies declined 0.6 cent to 88.17 cents a pound.
Elsewhere, other commodities prices fell as the dollar rose
against major world currencies. A stronger dollar can make
commodities appear more expensive to buyers abroad.
Oil prices fell after an official of the Organization for
Petroleum Exporting Countries indicated the group could boost
production, easing concerns about tight supplies.
"I would not exclude the possibility of increasing production if
the market wants it," said Chakib Khelil, Algeria's oil minister,
who becomes OPEC president on Jan. 1.
Light, sweet crude for January dropped 64 cents to close at $90.63
a barrel on the New York Mercantile Exchange.
Gasoline futures shed 0.63 cent to settle at $2.3354 a gallon,
while heating oil futures lost 1 cent to settle at $2.5979 a
gallon on the Nymex.
Precious metals ended in a mixed range, after fluctuating between
losses and gains. February gold edged up $1.30 to settle at
$799.30 an ounce, while March silver fell 0.3 cent to close at
$13.98 an ounce.
A euro bought $1.439, down from $1.4425 late Friday, as the dollar
Industrial metals mostly moved lower on the London Metal Exchange,
with copper and zinc showing the steepest declines. Nickel prices
Copper for March delivery fell 6.75 cents to $2.889 a pound on the