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Wheat Sets Record:
$7.34 a Bushel

by Lauren Villagran, Associated Press
Capital Press, August 24, 2007

NEW YORK - Wheat prices surged to an all-time high on Aug. 24, reflecting strong worldwide demand and extremely strained supplies. Other agriculture futures tailed the grain higher.

Elsewhere, energy prices ended mixed after the government reported a rise in crude oil inventories and a sharp drop in gasoline stockpiles. Industrial metals jumped on news of robust Chinese imports, while precious metals found support in a declining U.S. dollar.

Wheat hit an all-time record of $7.34 a bushel on the Chicago Board of Trade amid unrelenting demand from foreign buyers, who have shrugged off the high costs. Globally, wheat stocks are exceedingly tight after harvests in several producing nations were damaged by poor weather.

The U.S. has sold roughly 86 percent of what the government estimates will be sold in exports all year - far ahead of the last year's pace, when the country had sold just 27 percent of target exports at this time, said John Roach of Roach Ag Marketing. On Aug. 21, Egypt said it bought 240,000 tons of soft, red winter wheat, augmenting its recent buying spree.

"It's not like an 'Aha!' moment," Roach said. "We're digesting old news."

The price of bread and cereal at the supermarket isn't likely to go up right away, if at all, analysts say. The cost of processed and packaged foods is more affected by the costs of energy and packaging: A loaf of bread that sells for $2 has only about 6 cents of wheat in it, said Mark Fowler, technical director of International Grains Program at Kansas State University.

The agriculture market also gained momentum as futures for corn, soybeans and wheat all topped what traders refer to as technical resistance levels, meaning certain contracts crossed a price threshold that can trigger additional buying. Corn, soybeans and wheat all closed above their respective resistance levels.

December wheat piled on 27.75 cents to close at $7.3175 bushel. December corn gained 9.25 cents to $3.6425, and November soybeans jumped 16 cents to $8.47.

Related Pages:
Shipping Wheat: Truck or Barge? by Ken Casavant, Transportation Report 1995

Lauren Villagran, Associated Press
Wheat Sets Record: $7.34 a Bushel
Capital Press, August 24, 2007

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