Wheat at record on rise in demand, stockpiles dwindle

Aug 30 | Updated: Aug 31 2007, 05:47am hrs
Wheat futures in Chicago jumped to a record on signs of increased demand for global stockpiles that the US government says will fall to the lowest in 26 years. Corn and soybean futures declined.

Egypt, the second-biggest buyer of wheat last year behind Brazil, has purchased at least 1.4 million metric tonne so far this month, according to data compiled by Bloomberg News. India, the worlds second-biggest wheat consumer after China, got offers for 530,000 tonne in a tender on Wednesday to boost reserves.

We cannot rule out the possibility of seeing wheat prices at $8 a bushel by October, Shigeji Watanabe, an analyst at Meiji Bussan Co, said by phone from Tokyo on Thursday. The wheat market has been driven by recent physical purchases through tenders by countries, including Egypt.

Wheat futures for December delivery rose as much as 12.5 cents, or 1.7%, to $7.71 a bushel, topping Wednesdays record $7.605. The contract traded at $7.6695 in after-hours electronic trading on the Chicago Board of Trade at 1:08 pm Singapore time.

The wheat market was supported by signs that dry weather may hurt production in Ukraine and Australia, a country that was expected to be the second-largest exporter in the marketing year that started June 1.

Ukraine, the worlds seventh-largest wheat exporter, will ship 58% less grain this year after a three-month drought, the countrys agriculture minister said on Wednesday. Global inventories will fall to 114.8 million tonne by May 31, a 26-year low, the US department of agriculture said on August 10.