Wheat hits new highs as world appetite grows, supply shrinks
SPRING WHEAT surged to $10 a bushel for the first time since 2012 as hot and dry crop conditions from North America’s prairies to Russia’s Urals leaves the world short on grain used to make everything from croissants to pizza crusts.
Prices climbed for the sixth straight week, the longest run of gains in more than two years, as a global appetite grows for wheat of all types. The US expects overall grain stockpiles to end the season at a five-year low. The scarcity is boosting demand for hard red winter wheat, which was more abundant this year than other varieties. Those futures soared to a seven-year high.
Attention is now turning to 2022 and the early outlook is triggering concern. A three-month forecast from the US predicts more drought in some of the country’s key wheat regions. That could cause growers already facing soaring costs for basic farm products to hold back on big crop investments.
“With the dryness, combined with fertilizer prices up double year on year and availability concerns, many wheat farmers will be ‘spoon feeding’ their crop,” Justin Gilpin, chief executive officer of the Kansas Wheat Commission, said in an interview. It “makes 2022 production harder to estimate at this time.”
The prospect of further supply problems next year raises the chance that wheat prices will continue to surge upward and worsen worldwide food inflation. The latest United Nations figures show food prices at a decade high amid harvest setbacks and supply chain disruptions.
Higher wheat prices also could boost the cost of livestock feed when China has been looking for alternatives to corn and soybeans to feed help feed its hog herds.
Most-active spring wheat futures in the US climbed 2.8% to $10.13 a bushel on Friday, the highest since July 2012. The futures in Minneapolis have soared 69% this year.
Hard red winter wheat, which is widely used for all-purpose flour and also is a potential substitute for spring wheat, settled the day up 3.5% at $7.74 a bushel in Chicago. That’s the priciest since May 2014.
Benchmark soft winter wheat, an ingredient in cakes, cookies and crackers, rose 2% to $7.56 a bushel in Chicago.
In other crops, December corn rose and January soybeans fell. — Bloomberg
