Wheat Rises as U.S. Farmers May Be Limiting Sales After Slump

Wheat futures rose the most in four weeks in Chicago on speculation that U.S. farmers are holding onto grain, limiting supplies, after prices last month fell the most since June.

Futures dropped 12 percent in January partly because of slack demand for grain from the U.S., the world’s largest wheat exporter. A forecast for a 19 percent jump in global inventories in the year through May also may have pushed prices lower.

“Farmer selling has shut down,” said Darrell Holaday, the president of Advanced Market Concepts in Manhattan, Kansas. “They’re just keeping it in the bin and hoping” the price goes higher, he said.

Wheat futures for March delivery rose 12.5 cents, or 2.6 percent, to $4.8725 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since Jan. 4. Wheat has dropped 14 percent in the past year as demand declined and world inventories increased.

The price also may be rising on signs that demand for U.S. wheat may be improving. Department of Agriculture officials inspected 17.8 million bushels of the grain for export in the week ended Jan. 28, up 5.7 percent from the previous week, government data show.

“When we get down there and test those October lows, that narrows up U.S. prices versus world prices,” Holaday said. “We’ve narrowed that up, so now we have the potential for some exports.”

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, government data show.

By Tony C. Dreibus
Bloomberg