Wheat rose to the highest in almost five months as floods may hamper grain shipments in Australia and cold temperatures threatened U.S. crops. Scorching heat in South America is cutting harvest forecasts in one of the world’s key farm belts according to the Wall Street Journal.
Prices of corn, soybeans and wheat remain well below 2008 peaks, but analysts are expecting higher prices as the extent of crop losses in South America becomes clear. Weather forecasters see more heat and little rain on the immediate horizon. That could limit production further as recently planted corn and soybeans have reached key stages of development with only one-quarter of the amount of rainfall they normally need in some regions.
In the Australian state of Queensland, floods spread across an area the size of France and Germany, swamping roads. Rains became a problem for eastern Australia late last year.
The portion of the crop that “might have been salvaged is now unsalvageable, or is growing unsalvageable by the day and by the hour,” said Dennis Gartman, publisher of Gartman Letter, an industry newsletter.
A proper assessment of Australia’s damage is expected only after the floodwaters, which follow torrential rains associated with the La Niña weather pattern, recede. Many expect damage to run into the billions of dollars.
Temperatures in soft-red wheat areas in the U.S. Midwest have ranged from zero degrees to 10 degrees Fahrenheit with little snow cover to protect the crop. Hard-red varieties in the western portion of the country, including Colorado, have been plagued by drought.
World wheat output in the current season is forecast to lag behind demand by 20 million tons.