MercoPress. South Atlantic News Agency

Wheat price surges above the 10 US$ per bushel benchmark

Short suply and growing demand are fuelling wheat prices

Global wheat prices surged more than 3% on Monday, with Chicago Board of Trade wheat futures breaking the 10 US dollar a bushel benchmark for the first time, on dwindling world supplies, a lack of sellers and a push from financial investors.

Wheat prices have nearly doubled since the start of the year, fanning fears about food-price led inflation at a time the global economy could slow, and industry officials said crop worries and strong global demand would keep prices firm until a clearer picture emerged early next year about US and other leading world producers. US wheat, measured from the start of the decade, are now ahead of US crude oil and industrial metal copper with all three commodities, on a monthly-average basis, having risen more than three-and-a-half-fold since January 2000. The bellwether Chicago Board of Trade March wheat WH8 contract rose by the 30-cent-per-bushel daily limit overnight to 10.09 per bushel. In Europe, milling wheat futures set new two-and-a-half-month highs across the board in early trade. Benchmark March was up 6.5 euros by 1200 GMT at 267.50 euros after hitting 270.50 euros earlier. Other global agricultural markets including corn, soybeans and rapeseed were also sharply higher. With world wheat stocks seen dwindling to 30-year lows by the end of the 2007/08 marketing year and India and Pakistan scouting the market for large volumes of wheat, traders said there was very little chance of a big correction in prices. On the supply side, support came after Argentina's Agriculture Secretariat halted wheat exports in early December for several days to assess cold-weather damage and Russia is expected to slap a ban on wheat exports next month. Australia is virtually out of the world market following the loss of its export surplus because of a dreadful drought. But grain analysts stress that many of the fundamental factors such as low world wheat stocks and strong export demand have been in the market for months. "I would expect wild swings in the market until things become clear about plantings," said Mark Samson, vice president for South Asia of U.S. Wheat Associates, a body representing U.S. wheat farmers and exporters. "People just want to keep buying wheat after they checked last week that concerns over credit market and global economy did not hit demand for grains," an international trader said. Traders and analysts stressed that the surge in wheat prices had mainly hit current crop futures and that U.S. prices for the upcoming 2008/2009 harvest were heading in a different direction. In Chicago new crop wheat futures were down between 9-3/4 and 14 cents a bushel.