We can not rule out $10 for wheat, said Takaki Shigemoto, an analyst at Okachi & Co in Tokyo who has been researching grain markets for 25 years. Exporters are reducing the amount to curb domestic food prices, while importers are trying to secure as much grain as possible.
Wheat for December delivery rose as much as 22 cent, or 2.4%, on the Chicago Board of Trade and traded at $9.35 in after-hours electronic trading at 1:51 pm Singapore time. The contract gained 3.4% on Wednesday.
Russia last week said that it could tax grain exports to curb domestic prices. Ukraine and Russia want to hold down inflation before national elections scheduled this year.
Harvests also have been damaged in the US, Canada and Africa. World stocks of wheat, which supplies a fifth of the world's food calories, are set to fall 10% to 112.3 million tonne in the year to May 31, according to the US Department of Agriculture.
Buyers are concerned with getting their hands on the wheat, they are not particularly concerned about prices, Tobin Gorey, a commodity strategist at Commonwealth Bank of Australia, said by phone from Sydney. Each day that goes by the Australian crop looks worse. I don't know how high wheat prices can go.
Australia, expected by the USDA to be the second-biggest exporter of wheat this year, will produce 15.5 million tonne of the grain, the Australian Bureau of Agricultural and Resource Economics said last week. The USDA, earlier this month, had predicted Australia would harvest 21 million tonne.
The Australian crop continues to deteriorate, very little rain was recorded in the last two weeks since ABARE released their latest forecast,'' Skye Dixon, agribusiness economist at National Australia Bank Ltd, said by phone on Thursday from Melbourne. Farmers may gather as little as 12 million, she said.
Drought also hurt plants in Canada, which is expected by the USDA to export 14 million tonne of the grain and tie with Australia as the world's second-biggest supplier. Dry weather damaged crops in the US, the largest shipper, and in Africa.
There is concern about drought in northern Africa, prompting countries there, including Algeria, to import the grain and push prices higher, Shigemoto said.