Wheat Rises after Drought in US and Ukraine Crisis

It’s been a double-whammy winter for wheat farmers in the U.S., the world’s largest exporter.

With drought already sapping soil moisture across the Great Plains, the biggest growing region, a polar vortex in early 2014 put fields in a deep freeze, killing more plants than normal. Since crops began going dormant in November.

The prospect of crop damage is escalating supply concerns that sent Chicago wheat futures to their biggest rally to start a year in three decades. Prices jumped to a 10-month high March 20 after Russia’s annexation of the Crimea region in Ukraine boosted the risk of disruptions to grain shipments from the Black Sea. U.S. exports for delivery before the harvest in June are up 19 percent from last year, and domestic inventories on March 1 were down 15 percent from a year earlier.

Rising Prices

Wheat futures on the Chicago Board of Trade jumped 16 percent in March, the biggest monthly gain since July 2012, and are up 12 percent since Dec. 31. Prices that touched a 42-month low of $5.50 a bushel on Jan. 29 closed on 2 April at $6.76.

Export Sales

U.S. sales of wheat for delivery by May 31 totaled 30.35 million tons as of March 27, compared with 25.53 million a year earlier, the USDA said. Sales for delivery in the 12 months that start June 1 are up 17 percent, with increased purchases by Mexico, South Korea and the Philippines, three of the top six buyers of U.S. wheat.

Rising demand helped reduce domestic wheat inventories on March 1 by 15 percent to 1.056 million bushels, the lowest for the date since 2009, USDA data show.