CHICAGO: Chicago wheat futures rose to their highest level in almost nine years on Tuesday, as the declining condition of the US winter crop raised worries over global supply at a time of tight global stocks and strong international demand.
US oat futures also hit contract highs on Tuesday, and in Europe, the Paris-based most-traded March wheat contract hit a 13-1/2 year high of 289.00 euros per tonne.
But as the session continued, US wheat prices eased on profit taking and talk of higher interest rates gave a boost to the US dollar, traders said.
“The market is trying to test how high the price has to get in order to slow down demand,” said Don Roose, president of Iowa-based US Commodities.
Also on Tuesday, corn futures fell slightly. Soybeans gained ground after a US Department of Agriculture report showed slower-than-expected harvest progress.
The most-active wheat contract on the Chicago Board Of Trade (CBOT) was down 0.38% at $7.94-1/4 as of 1602 GMT, after hitting a December 2012 high of $8.07 a bushel in earlier trade.
US corn was down 0.82% at $5.74-1/4 a bushel and soybeans gained 0.06% to $12.49-1/4 a bushel.
The early-session rally in wheat was given a boost by a US Agriculture Department report on Monday afternoon, which showed good-to-excellent ratings for the US winter wheat crop fell to 45% – bucking analysts’ expectation for an improvement.
Meanwhile, Saudi Arabia’s main state wheat buying agency said it bought about 1.268 million metric tonnes of milling wheat in a massive deal that exceeded some traders’ expectations.
Now, traders are starting to keep a close eye on the size of the wheat harvest coming out of the Southern Hemisphere, and whether that may alleviate some supply concerns.
“We’re seeing the Australian wheat crop getting bigger and Argentina crops are large, too,” Roose said. “So there is wheat available right now in the market.”