Wheat Nears Record on Supply Concerns

Wheat prices soared near their highest levels ever Tuesday on concerns that growing demand in Asia coupled with dwindling stockpiles could lead to a grain shortage in the United States.

Other commodities markets mostly declined, with energy, other agricultural products and precious metals moving lower.

U.S. wheat stockpiles have thinned as bad weather has battered crop after crop around the world, most recently in Argentina and India. The scarcity has fed seemingly relentless demand for wheat supplies, often at any cost. U.S. wheat exporters have sold more than 15 million bushels a week for seven of the last 11 weeks, well above the U.S. Department of Agriculture's weekly target of about 1 million bushels a week.

"We continue to export wheat at too fast a pace," said Jason Ward, analyst with Northstar Commodity in Minneapolis. "You've got enough forward contracts overseas so the fear is that what you've got sold thus far is possibly more than you've got planted."

Wheat for March deliver surged the daily limit on the Chicago Board of Trade, jumping 30 cents to fetch $10.03 a bushel. Wheat was just shy of its all-time high of $10.095 a bushel.

Dry weather in India, the world's second largest wheat producer, has contributed to global supply tightness. India's grain-belt has been stricken with long periods of drought since December, threatening roughly half the country's 2.8 billion bushel crop.

"They're stuck in that (dry) pattern. The damage isn't done yet, but it will be done if we stay in this pattern for the next two or three weeks," Ward said.

Unprecedented demand for agricultural products from fast-growing countries including China and India has exacerbated the supply crunch. In the market panics of previous years, prices would rise to a level that developing countries couldn't afford. But as the economies of some development countries strengthen, high prices have not slowed their buying of major food commodities.

Other agriculture futures traded lower Tuesday. Corn for March delivery lost 2 cents to $5.085 a bushel on the CBOT, while March soybeans slipped 2.5 cents to $13.235 a bushel.