Pro-
Speculators buy up drought-hit wheat crops to earn their daily bread
Surge in world commodity prices spreads to the farms as investors wade in
Julia Finch, city editor
Saturday October 28, 2006
The Guardian
First oil and natural gas - then copper, nickel and zinc. Now the surge in commodity prices has reached the wide open plains.
Corn and wheat prices have risen by up to 60% this year. Many grain traders, together with new investors in the so-called soft commodities, believe that a structural shift is under way. They point to burgeoning demand from China and India, increasing interest in biofuels and a new breed of speculative investor wading into the market and chasing prices higher.
So far, the increases in wheat and corn, which will put pressure on food companies to raise shop prices, are only a fraction of those seen in the markets for energy and metals. Gas prices have risen by up to 500% since the current commodity price rally started five years ago; copper, nickel and zinc by up to 400%; and precious metals by 150% to 230%. However, energy and metals have now come off their highs, while the soft commodity surge started only a year ago, and many traders and analysts think their bounce has only just begun.
In recent weeks, wheat prices have come off their highest points, as speculators have started taking profits, but there is little sign so far of any major reverse, not least because stocks are tight. For years, grain prices have been among the least volatile of commodities. If a shortage loomed, farmers could clear land and plant more. Increasing grain supply is still easier, and far quicker, than digging a new mine to increase the supply of a metal or successfully drilling for oil. But global wheat and corn stocks are at their lowest level for 25 years, while demand has risen. World wheat stocks are currently equal to less than 10 weeks of consumption - the lowest on record.
Short-term global weather patterns are causing at least some of the wheat supply problems, most particularly the drought in Australia, which accounts for some 15% of the wheat traded worldwide. In its October circular, the United States Department of Agriculture said: "Severe drought in Australia is decimating grain crops, curtailing exports and causing major price and trade impacts on global grain markets." It predicts that Australian exports will fall by a third this year. This will "exacerbate an already very tight global situation and result in even further drawdowns in exporters' stocks, which typically impact world prices. This has already caused prices to soar to the highest levels in a decade".
Bad growing weather is not restricted to Australia. South American producers have also suffered a water shortage, and more rain is also needed in the US plains hard red winter wheat region. Things could get worse: US oceanographers have detected early signs of El Niño this year bringing the possibility of floods to the west coast of the Americas and drought on the other side of the ocean. Michael Lewis, a commodities specialist at Deutsche Bank, says the threat of El Niño must not be ignored: Australian wheat production has slumped by between by 16 and 45% in the last four major El Niño years since 1970 and "could be adversely affected if this weather phenomenon starts to build in intensity".
However, it is not only the weather that has caused this year's price rises. Increased demand for biofuels such as ethanol is also having a big impact. The US, which makes ethanol from corn, produced 4.3bn gallons of ethanol last year - almost double the amount produced only three years earlier. Higher oil and petrol prices have made ethanol more competitive, and new refineries coming into production are expected to nearly double US output by 2012.
About 14% of total US corn consumption already goes into ethanol and, according to the investment bank Merrill Lynch, prices are bound to rise to encourage farmers to grow more. "As ethanol demand continues to pass through to corn, corn prices will likely have to increase," says the bank's commodity strategist, Francisco Blanch.
Other traders believe that China's growing economic wealth is a key factor behind the recent soft commodity price rises. As Chinese incomes rise, the demand for better food is bound to increase, they argue, and while China continues to grow there is only one way demand will move.
Another force behind the recent price rises has been an influx of more speculative investors - including hedge funds, institutional and even retail investors. They trade aggressively, increase price volatility and are bringing a whole new meaning to the phrase "bet the farm".
One recent estimate suggested that more than two-thirds of the long positions in one benchmark soft red wheat contract traded at the Chicago Board of Trade were held by commodity index funds.
Now British investors, both large and small, can climb on board. Three weeks ago, ETF Securities launched a full list of Exchange Traded Commodities (ETCs), listed in London, which allow investors to bet on commodity price movements in the same way as they buy and sell shares. The range includes 21 individual commodities, from wheat and zinc to lean hogs. It is also offering nine index ETCs, so that investors can bet on baskets of commodities, such as grains, industrial metals or other agricultural products.
ETF's head of new listings, Nik Bienkowski, puts at least some of the interest in "softs" down to straightforward "rotation" - investors moving out of one commodity and into another simply in search of the next big thing. "Almost all the inquiries we received in the run-up to the listings was about softs and grains," he said.
Since listing, 43% of the index trading volume has been in agriculture and grains, while the biggest crowd pullers for investors putting cash into the individual ETCs have been natural gas, sugar and wheat. Deutsche Bank's Michael Lewis says that despite the recent price rises, corn and wheat "remain significantly undervalued when examined in real terms" and would have to rise by 135% and 60% respectively to reach the highs posted in 1996. "Looking into next year, we expect [that] increasing shortages ... will propel prices even higher. There is potential for substantial price appreciation." Mr Bienkowski added: "Everyone is talking about the softs, especially when you have people like Jim Rogers saying he's putting money in."
Mr Rogers is a former righthand man to the international financier George Soros and co-founder of the Quantum hedge fund. Back in 1999, when the rest of the investment world was entranced by dotcom stocks, Jim Rogers was insisting "the next big thing is things" - and started a top performing commodities fund. This summer, he told the Guardian: "Agricultural commodities are the most attractive. The hectares devoted to wheat have been declining for 30 years. The world has consumed more food than it has produced for the past five years, and that's the first time in recorded history that that's happened.
"We've had no worldwide drought for several years. I don't know if we'll have one again, but I know what happened in the 1960s and 1970s when we had droughts with low stocks of nutrition: the price of sugar went up 47-fold in an eight-year period."
Pro-Wheat Prices May Reach Record, Hurting Kellogg, Helping Funds
By Tony C. Dreibus and Jeff Wilson
Oct. 30 (Bloomberg) -- A growing scarcity of wheat may send prices for the world's most-planted crop to their highest in the next six months, threatening to spur inflation in China and India and increase costs for food companies.
Reduced production because of droughts in Australia, Ukraine and the U.S. sent wheat skyrocketing 50 percent this year. Prices may jump 47 percent more to $7.50 a bushel on Chicago futures markets, matching the 1996 record, said Brent Harris, who runs the $14 billion Commodity Real Return Strategy Fund for Pacific Investment Management Co. in Newport Beach, California. Michael Lewis at Deutsche Bank AG in London said grains will outperform all other commodities in 2007.
Wheat's rally has boosted costs for Kellogg Co., the largest U.S. cereal producer, and Kraft Foods Inc., the world's second- biggest food maker. Third-quarter expenses for flour at Canada Bread Co. surged 35 percent, the most in a decade. The major economies most affected are China and India, where staples such as bread are a bigger share of consumer spending. Two-thirds of the world's wheat harvest is used for food.
``I expect to see new records being set in the next two to three years because of global shortages,'' said Stephan Wrobel, chief executive officer at Diapason Commodities Management SA based in London and Lausanne, Switzerland, which oversees $5.5 billion. ``Agriculture has outperformed energy and metals since September, and I expect that to continue into 2007.''
Wheat rose 0.7 percent last week to $5.085 a bushel on the Chicago Board of Trade after Australia forecast the smallest crop in 12 years and consumer nations accelerated purchases, locking in supplies before prices race higher.
Inventories Plunge
Egypt, the world's biggest wheat importer, bought 180,000 metric tons for $34.4 million, triple what it had initially sought. A state-run grain trading company in India said it wants to purchase as much as 35,000 tons after already buying 6.5 million tons this year.
World inventories will fall 43 percent by June to 119.3 million tons, the lowest since 1982, the U.S. Department of Agriculture said Oct. 12. Australia, the third-biggest exporter, will see its wheat crop decline 61 percent to 9.5 million tons. Ukraine, the sixth-largest exporter, expects its harvest will drop 10 percent.
Hedge funds say they're increasing their bets on wheat. Rudolphe Roche, who co-manages the $97 million commodity fund at Schroders Plc in London, forecasts prices on the Kansas City Board of Trade will to more than $7 a bushel in 2007. The fund has a 10 percent holding in wheat, its maximum for a single commodity.
``I am extremely bullish on wheat given the shortages in global inventories,'' Roche said. ``All the major producers have suffered from dry weather conditions.''
Rising Costs
Kellogg estimates higher costs for wheat, sugar and fuel will cut profit by as much as 30 cents a share this year, equal to 11 percent of last year's total. The Battle Creek, Michigan- based company will eliminate about 220 jobs at a Corn Flakes plant in Manchester, England, to save money.
Canada Bread, the Etobicoke, Ontario-based unit of Canada's largest food processor, Maple Leaf Foods Inc., reported a net loss of C$2.7 million on Oct. 26, in part because the company wasn't able to raise product prices fast enough to offset the surge in the cost of flour.
Shares of Panera Bread Co., the Richmond Heights, Missouri- based operator of almost 1,000 bakeries and cafes, on Oct. 25 sank 6.2 percent after the company reported third-quarter profit missed some analysts' estimates and that costs may rise next year, including expenses for wheat and flour.
Demand Increases
Demand is rising in the $21 billion-a-year wheat market. India, the second-largest producer and consumer of wheat, will import 6 million tons this year, compared with 300,000 tons last year, making it a net importer for the first time since 2000, the USDA said.
India's imports mark a reversal for the nation's so-called green revolution, which used new hybrid grain seeds in the 1960s to become close to self-sufficient in wheat.
The inflation rate in India was 5.26 percent this month, higher than the so-called tolerance level of 4 percent set by Finance Minister Palaniappan Chidambaram. In China, inflation should accelerate to 2.2 percent in 2007 from 1.4 percent this year, according to Goldman Sachs Group Inc. economist Liang Hong in Hong Kong.
Some Hardships
Higher wheat prices ``will present a hardship for some countries,'' said Ernie Goss, professor of economics at Creighton University in Omaha, Nebraska. ``Cereal prices will go up and bread prices will go up. People won't buy that much less of it. You end up buying less clothing. Food and gasoline fit into the same category.''
Supplies are tighter today than they were in 1996, when the price of the most-active wheat futures on the Chicago Board of Trade jumped to $6.36 a bushel and the expiring March contract reached a record $7.50, said Pimco's Harris, 46.
Wheat inventories will be equal to 19 percent of demand next year, the lowest on record, down from almost 24 percent this year, USDA data show. Reserve supplies will be equal to 71 days of demand, barely half the 131-day buffer in 2000.
Greg Smith, who helps manage $90 million at Adelaide, Australia-based Global Commodities Ltd., boosted his grain holdings to 14 percent from 1 percent at the start of the year as prospects for supply dimmed.
``You can plant the seed, but if there's no water, there's the same problem,'' Smith said.
Farmers Profit
The price rally has been a bonanza for farmers with grain to sell, and already some are planting more.
David Schemm said he sowed 33 percent more wheat on his 11,000-acre farm in Kansas the past month. ``I have never seen prices this high,'' said Schemm, 35, who seeded 4,000 acres of wheat, up from 3,000 at this time last year. The third-generation farmer also produces corn, sorghum and milo.
While Schemm expects a rally to increase his profits next year, new supplies from Kansas won't be available until June, and there's still the risk of harsh weather damaging crops. This year, U.S. production dropped by 14 percent because of the drought in the Midwest.
History shows farmers can recover from a poor harvest.
``People do respond to prices, and it is already happening,'' said Tobin Gorey, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. The prospect of more crops in the Northern Hemisphere will mean ``prices in the middle of next year are a lot lower than 2006,'' he said.
Goldman Says Sell
Goldman Sachs Group, the world's most profitable securities firm, told investors on Oct. 20 to sell wheat, reversing a buy rating made in May. Senior commodities analyst James Gutman said in a report that ``wheat prices have already factored in the bullish supply news.''
A decade ago, when prices last rose above $5 a bushel, global wheat farmers increased acreage by 5.2 percent and world production rose 8.3 percent in the marketing year that began June 1, 1996, said Sid Love, a market analyst for Kropf and Love Consulting in Kansas City, Kansas.
``Farmers will plant more $5 wheat in the U.S., Canada, Europe, India and in the former Soviet Union,'' said Love, who forecast a rise in global production next year of 6 percent to 620 million metric tons.
The seeding of the winter-wheat crop in the U.S., which accounted for 72 percent of the country's total wheat production last year, was 86 percent complete as of Oct. 22, the government said. Winter wheat is sown into November and goes dormant until April, when it resumes growth and is harvested in June.
The extra wheat may not slow the rally. Prices will rise at least $1 a bushel because the current cost ``is not enough to crimp demand,'' Pimco's Harris said.
``It would seem that $7.50 could be seen again'' should weather threaten next year's crops in any of the major producing countries, he said. ``If drought happens again, the market will be rocking.''
Pro- Feed Barley prices over 3.50/bushel at the bin
Con- Malt Barley prices under 3.50 at the elevator
Speculators buy up drought-hit wheat crops to earn their daily bread
Surge in world commodity prices spreads to the farms as investors wade in
Julia Finch, city editor
Saturday October 28, 2006
The Guardian
First oil and natural gas - then copper, nickel and zinc. Now the surge in commodity prices has reached the wide open plains.
Corn and wheat prices have risen by up to 60% this year. Many grain traders, together with new investors in the so-called soft commodities, believe that a structural shift is under way. They point to burgeoning demand from China and India, increasing interest in biofuels and a new breed of speculative investor wading into the market and chasing prices higher.
So far, the increases in wheat and corn, which will put pressure on food companies to raise shop prices, are only a fraction of those seen in the markets for energy and metals. Gas prices have risen by up to 500% since the current commodity price rally started five years ago; copper, nickel and zinc by up to 400%; and precious metals by 150% to 230%. However, energy and metals have now come off their highs, while the soft commodity surge started only a year ago, and many traders and analysts think their bounce has only just begun.
In recent weeks, wheat prices have come off their highest points, as speculators have started taking profits, but there is little sign so far of any major reverse, not least because stocks are tight. For years, grain prices have been among the least volatile of commodities. If a shortage loomed, farmers could clear land and plant more. Increasing grain supply is still easier, and far quicker, than digging a new mine to increase the supply of a metal or successfully drilling for oil. But global wheat and corn stocks are at their lowest level for 25 years, while demand has risen. World wheat stocks are currently equal to less than 10 weeks of consumption - the lowest on record.
Short-term global weather patterns are causing at least some of the wheat supply problems, most particularly the drought in Australia, which accounts for some 15% of the wheat traded worldwide. In its October circular, the United States Department of Agriculture said: "Severe drought in Australia is decimating grain crops, curtailing exports and causing major price and trade impacts on global grain markets." It predicts that Australian exports will fall by a third this year. This will "exacerbate an already very tight global situation and result in even further drawdowns in exporters' stocks, which typically impact world prices. This has already caused prices to soar to the highest levels in a decade".
Bad growing weather is not restricted to Australia. South American producers have also suffered a water shortage, and more rain is also needed in the US plains hard red winter wheat region. Things could get worse: US oceanographers have detected early signs of El Niño this year bringing the possibility of floods to the west coast of the Americas and drought on the other side of the ocean. Michael Lewis, a commodities specialist at Deutsche Bank, says the threat of El Niño must not be ignored: Australian wheat production has slumped by between by 16 and 45% in the last four major El Niño years since 1970 and "could be adversely affected if this weather phenomenon starts to build in intensity".
However, it is not only the weather that has caused this year's price rises. Increased demand for biofuels such as ethanol is also having a big impact. The US, which makes ethanol from corn, produced 4.3bn gallons of ethanol last year - almost double the amount produced only three years earlier. Higher oil and petrol prices have made ethanol more competitive, and new refineries coming into production are expected to nearly double US output by 2012.
About 14% of total US corn consumption already goes into ethanol and, according to the investment bank Merrill Lynch, prices are bound to rise to encourage farmers to grow more. "As ethanol demand continues to pass through to corn, corn prices will likely have to increase," says the bank's commodity strategist, Francisco Blanch.
Other traders believe that China's growing economic wealth is a key factor behind the recent soft commodity price rises. As Chinese incomes rise, the demand for better food is bound to increase, they argue, and while China continues to grow there is only one way demand will move.
Another force behind the recent price rises has been an influx of more speculative investors - including hedge funds, institutional and even retail investors. They trade aggressively, increase price volatility and are bringing a whole new meaning to the phrase "bet the farm".
One recent estimate suggested that more than two-thirds of the long positions in one benchmark soft red wheat contract traded at the Chicago Board of Trade were held by commodity index funds.
Now British investors, both large and small, can climb on board. Three weeks ago, ETF Securities launched a full list of Exchange Traded Commodities (ETCs), listed in London, which allow investors to bet on commodity price movements in the same way as they buy and sell shares. The range includes 21 individual commodities, from wheat and zinc to lean hogs. It is also offering nine index ETCs, so that investors can bet on baskets of commodities, such as grains, industrial metals or other agricultural products.
ETF's head of new listings, Nik Bienkowski, puts at least some of the interest in "softs" down to straightforward "rotation" - investors moving out of one commodity and into another simply in search of the next big thing. "Almost all the inquiries we received in the run-up to the listings was about softs and grains," he said.
Since listing, 43% of the index trading volume has been in agriculture and grains, while the biggest crowd pullers for investors putting cash into the individual ETCs have been natural gas, sugar and wheat. Deutsche Bank's Michael Lewis says that despite the recent price rises, corn and wheat "remain significantly undervalued when examined in real terms" and would have to rise by 135% and 60% respectively to reach the highs posted in 1996. "Looking into next year, we expect [that] increasing shortages ... will propel prices even higher. There is potential for substantial price appreciation." Mr Bienkowski added: "Everyone is talking about the softs, especially when you have people like Jim Rogers saying he's putting money in."
Mr Rogers is a former righthand man to the international financier George Soros and co-founder of the Quantum hedge fund. Back in 1999, when the rest of the investment world was entranced by dotcom stocks, Jim Rogers was insisting "the next big thing is things" - and started a top performing commodities fund. This summer, he told the Guardian: "Agricultural commodities are the most attractive. The hectares devoted to wheat have been declining for 30 years. The world has consumed more food than it has produced for the past five years, and that's the first time in recorded history that that's happened.
"We've had no worldwide drought for several years. I don't know if we'll have one again, but I know what happened in the 1960s and 1970s when we had droughts with low stocks of nutrition: the price of sugar went up 47-fold in an eight-year period."
Pro-Wheat Prices May Reach Record, Hurting Kellogg, Helping Funds
By Tony C. Dreibus and Jeff Wilson
Oct. 30 (Bloomberg) -- A growing scarcity of wheat may send prices for the world's most-planted crop to their highest in the next six months, threatening to spur inflation in China and India and increase costs for food companies.
Reduced production because of droughts in Australia, Ukraine and the U.S. sent wheat skyrocketing 50 percent this year. Prices may jump 47 percent more to $7.50 a bushel on Chicago futures markets, matching the 1996 record, said Brent Harris, who runs the $14 billion Commodity Real Return Strategy Fund for Pacific Investment Management Co. in Newport Beach, California. Michael Lewis at Deutsche Bank AG in London said grains will outperform all other commodities in 2007.
Wheat's rally has boosted costs for Kellogg Co., the largest U.S. cereal producer, and Kraft Foods Inc., the world's second- biggest food maker. Third-quarter expenses for flour at Canada Bread Co. surged 35 percent, the most in a decade. The major economies most affected are China and India, where staples such as bread are a bigger share of consumer spending. Two-thirds of the world's wheat harvest is used for food.
``I expect to see new records being set in the next two to three years because of global shortages,'' said Stephan Wrobel, chief executive officer at Diapason Commodities Management SA based in London and Lausanne, Switzerland, which oversees $5.5 billion. ``Agriculture has outperformed energy and metals since September, and I expect that to continue into 2007.''
Wheat rose 0.7 percent last week to $5.085 a bushel on the Chicago Board of Trade after Australia forecast the smallest crop in 12 years and consumer nations accelerated purchases, locking in supplies before prices race higher.
Inventories Plunge
Egypt, the world's biggest wheat importer, bought 180,000 metric tons for $34.4 million, triple what it had initially sought. A state-run grain trading company in India said it wants to purchase as much as 35,000 tons after already buying 6.5 million tons this year.
World inventories will fall 43 percent by June to 119.3 million tons, the lowest since 1982, the U.S. Department of Agriculture said Oct. 12. Australia, the third-biggest exporter, will see its wheat crop decline 61 percent to 9.5 million tons. Ukraine, the sixth-largest exporter, expects its harvest will drop 10 percent.
Hedge funds say they're increasing their bets on wheat. Rudolphe Roche, who co-manages the $97 million commodity fund at Schroders Plc in London, forecasts prices on the Kansas City Board of Trade will to more than $7 a bushel in 2007. The fund has a 10 percent holding in wheat, its maximum for a single commodity.
``I am extremely bullish on wheat given the shortages in global inventories,'' Roche said. ``All the major producers have suffered from dry weather conditions.''
Rising Costs
Kellogg estimates higher costs for wheat, sugar and fuel will cut profit by as much as 30 cents a share this year, equal to 11 percent of last year's total. The Battle Creek, Michigan- based company will eliminate about 220 jobs at a Corn Flakes plant in Manchester, England, to save money.
Canada Bread, the Etobicoke, Ontario-based unit of Canada's largest food processor, Maple Leaf Foods Inc., reported a net loss of C$2.7 million on Oct. 26, in part because the company wasn't able to raise product prices fast enough to offset the surge in the cost of flour.
Shares of Panera Bread Co., the Richmond Heights, Missouri- based operator of almost 1,000 bakeries and cafes, on Oct. 25 sank 6.2 percent after the company reported third-quarter profit missed some analysts' estimates and that costs may rise next year, including expenses for wheat and flour.
Demand Increases
Demand is rising in the $21 billion-a-year wheat market. India, the second-largest producer and consumer of wheat, will import 6 million tons this year, compared with 300,000 tons last year, making it a net importer for the first time since 2000, the USDA said.
India's imports mark a reversal for the nation's so-called green revolution, which used new hybrid grain seeds in the 1960s to become close to self-sufficient in wheat.
The inflation rate in India was 5.26 percent this month, higher than the so-called tolerance level of 4 percent set by Finance Minister Palaniappan Chidambaram. In China, inflation should accelerate to 2.2 percent in 2007 from 1.4 percent this year, according to Goldman Sachs Group Inc. economist Liang Hong in Hong Kong.
Some Hardships
Higher wheat prices ``will present a hardship for some countries,'' said Ernie Goss, professor of economics at Creighton University in Omaha, Nebraska. ``Cereal prices will go up and bread prices will go up. People won't buy that much less of it. You end up buying less clothing. Food and gasoline fit into the same category.''
Supplies are tighter today than they were in 1996, when the price of the most-active wheat futures on the Chicago Board of Trade jumped to $6.36 a bushel and the expiring March contract reached a record $7.50, said Pimco's Harris, 46.
Wheat inventories will be equal to 19 percent of demand next year, the lowest on record, down from almost 24 percent this year, USDA data show. Reserve supplies will be equal to 71 days of demand, barely half the 131-day buffer in 2000.
Greg Smith, who helps manage $90 million at Adelaide, Australia-based Global Commodities Ltd., boosted his grain holdings to 14 percent from 1 percent at the start of the year as prospects for supply dimmed.
``You can plant the seed, but if there's no water, there's the same problem,'' Smith said.
Farmers Profit
The price rally has been a bonanza for farmers with grain to sell, and already some are planting more.
David Schemm said he sowed 33 percent more wheat on his 11,000-acre farm in Kansas the past month. ``I have never seen prices this high,'' said Schemm, 35, who seeded 4,000 acres of wheat, up from 3,000 at this time last year. The third-generation farmer also produces corn, sorghum and milo.
While Schemm expects a rally to increase his profits next year, new supplies from Kansas won't be available until June, and there's still the risk of harsh weather damaging crops. This year, U.S. production dropped by 14 percent because of the drought in the Midwest.
History shows farmers can recover from a poor harvest.
``People do respond to prices, and it is already happening,'' said Tobin Gorey, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. The prospect of more crops in the Northern Hemisphere will mean ``prices in the middle of next year are a lot lower than 2006,'' he said.
Goldman Says Sell
Goldman Sachs Group, the world's most profitable securities firm, told investors on Oct. 20 to sell wheat, reversing a buy rating made in May. Senior commodities analyst James Gutman said in a report that ``wheat prices have already factored in the bullish supply news.''
A decade ago, when prices last rose above $5 a bushel, global wheat farmers increased acreage by 5.2 percent and world production rose 8.3 percent in the marketing year that began June 1, 1996, said Sid Love, a market analyst for Kropf and Love Consulting in Kansas City, Kansas.
``Farmers will plant more $5 wheat in the U.S., Canada, Europe, India and in the former Soviet Union,'' said Love, who forecast a rise in global production next year of 6 percent to 620 million metric tons.
The seeding of the winter-wheat crop in the U.S., which accounted for 72 percent of the country's total wheat production last year, was 86 percent complete as of Oct. 22, the government said. Winter wheat is sown into November and goes dormant until April, when it resumes growth and is harvested in June.
The extra wheat may not slow the rally. Prices will rise at least $1 a bushel because the current cost ``is not enough to crimp demand,'' Pimco's Harris said.
``It would seem that $7.50 could be seen again'' should weather threaten next year's crops in any of the major producing countries, he said. ``If drought happens again, the market will be rocking.''
Pro- Feed Barley prices over 3.50/bushel at the bin
Con- Malt Barley prices under 3.50 at the elevator
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