CHICAGO (Dow Jones)--U.S. wheat futures rallied Tuesday as global weather problems, including new floods in Australia, pushed buyers to accelerate their purchases.
Soft red winter wheat for March delivery closed up 20 cents, or 2.6%, at a nearly two-week high of $7.93 1/4 a bushel at the Chicago Board of Trade.
Algeria, one of several North African and Middle Eastern countries that have faced protests over rising food prices, sparked the latest rally by buying a massive 600,000 tons of optional-origin wheat, traders said. The purchase, for shipment between March and April, brings the country's purchases this month to nearly one million tons.
Turkey also jumped into the market and bought 175,000 tons of U.S. hard red winter wheat, the U.S. government said Tuesday. Hard red winter wheat is a good-quality variety, usually used to make bread, that is grown in the central and southern U.S. Plains.
"You continue to hear about these various civil unrests concerning the tightness of food supplies in the world market," said Shawn McCambridge, Chicago-based senior grains analyst at Prudential Bache, a brokerage firm. "That continues to keep the issue of tight commodities in front of the investment public."
Importers scrambled to secure food wheat as floods expanded into the Australian state of Victoria from Queensland, where they had previously been focused, and disrupted the harvest and transportation of grain. Heavy rains have already lowered the quality of wheat grown in Australia, the world's fourth-largest exporter of the grain, shifting demand to the U.S., the leading exporter.
Demand for French wheat, a competitor to U.S. soft red winter wheat, from traditional North African buyers also has surged this month as governments have stepped up purchases in a bid to stave off protests over rising food prices. Algeria, Libya, and Jordan all launched tenders in recent weeks after protests in Tunisia left scores dead and toppled the country's long-standing President Zine al-Abidine Ben Ali.
"Panic is starting to surface in the world wheat market," said AgResource Co., a Chicago-based agricultural consultancy.
France faces a possible wheat deficit this season as supplies from the southern hemisphere--hoped-for by many in government--are unlikely to alleviate demand for European wheat, FC Stone commodity risk manager Jaime Nolan-Miralles said Monday. Exports from Australia and Argentina won't be large enough to bring "any real alleviation of the demand for European wheat," he said.
Kansas City Board of Trade
Hard red winter wheat for March delivery climbed 16 1/2 cents, or 1.9%, to $8.76 1/2 a bushel at the Kansas City Board of Trade.
Market participants are worried that floods in Australia will continue to slow grain transportation and exports. Australia's wheat exports in November fell 44% from the previous month to 919,000 tons, the Australian Bureau of Statistics reported Monday.
Minneapolis Grain Exchange
Hard red winter wheat for March delivery gained 15 3/4 cents, or 1.8%, to $9.06 a bushel at the Minneapolis Grain Exchange.
Rice futures
U.S. rice futures climbed by the daily 50-cent limit Tuesday on spillover support from a price rally in wheat--another global food staple--and worries about farmers' plans to sow less rice this spring. Farmers in the Mississippi Delta are expected to plant less rice and more cotton, soybeans and corn because the other crops are more profitable.
Rice for March delivery, the most-active contract, surged 50 cents, or 3.6%, to a six-week high of $14.51 per hundredweight at the CBOT. The daily limit will temporarily expand to 75 cents on Wednesday.
-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com
US WHEAT REVIEW: Soars On Firm Global Demand, Poor Weather
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