Wheat futures soar after Kazakhstan moves to restrict grain exports
By STEVENSON JACOBS, AP Business Writer
Monday, February 25, 2008 6:59 PM CST
NEW YORK 2/25/08 - Wheat futures shot up 60 cents a bushel Monday after Kazakhstan said it would slow grain exports by imposing customs duties, adding to concerns over tightening global supplies.
Other commodities traded mixed, with crude oil gaining and gold falling.
Wheat prices have surged to historic highs as bad weather has battered crop after crop around the globe, most recently in India and Canada. Foreign buyers scrambling to lock in supplies have increasingly turned to other wheat-growing countries like the United States and Kazakhstan, which are exporting the grain at record pace. Kazakhstan’s Agriculture Ministry said Sunday the country has sold about 75 percent of its wheat and will impose customs duties on what’s left - about 110 million bushels.
“In a normal year, 110 million bushels wouldn’t be a big deal, but with tight supplies like you have, it’s a chunk of wheat,” said Jason Ward, analyst with Northstar Commodities in Minneapolis.
Wheat for May delivery surged the 60-cent daily trading limit to settle at $11.245 a bushel on the Chicago Board of Trade. That was shy of wheat’s recent all-time high of $11.6975 a bushel.
Other agriculture products joined wheat’s rally. Soybeans for May delivery jumped to a record $14.85 a bushel on the CBOT before easing back to settle at $14.6925 a bushel, still up 31 cents. March corn rose 11 cents to settle at $5.3325 a bushel after earlier hitting a record $5.4175 a bushel.
Relentless demand for agricultural products from fast-growing countries including China and India has exacerbated the supply crunch for wheat, which has more than doubled in price since last year.
The higher wheat prices may not immediately affect U.S. consumers since big food companies like Kellogg Co., General Mills Inc., and Kraft Foods Inc. typically protect themselves from price volatility with long-term supply contracts. But analysts say consumers should eventually expect higher prices to work themselves into the grocery aisle.
“In May or June you’re going to start seeing some ramifications of these prices,” Ward said. “The demand for wheat is still there. The only change I’ve seen thus far is that some restaurants have stopped giving out bread or are charging for it.”
In energy futures, crude oil approached $100 a barrel on supply concerns heightened by a Turkish military incursion into northern Iraq and warnings by Iran against further international sanctions.
Light, sweet crude for April delivery rose 42 cents to settle at $99.23 a barrel on the New York Mercantile Exchange after earlier climbing as high as $99.70 a barrel.
Other energy futures also rose. March heating oil added 2.23 cents to settle at $2.7853 a gallon on the Nymex, while March gasoline futures edged 0.82 cent higher to settle at $2.5419 a gallon.
In precious metals, gold futures fell sharply after the dollar gained a little muscle against the euro. Gold for April delivery shed $7.30 to settle at $940.50 an ounce on the Nymex, after earlier falling as low as $935.50.
Other metals traded mixed. March silver added 5 cents to settle at $18.085 an ounce on the Nymex, while March copper declined 5 cents to settle at $3.7395 a pound.
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