Wheat Closes at All Time High

Bullish wheat data from the USDA sent futures to new all time closing highs at all three exchanges.

Some contracts traded limit up during the session, but late profit-taking and market-on-close sell orders trimmed gains, particularly at the CBOT and KCBT.

In its small grains report, the USDA slashed its forecast for total 2007-2008 U.S. wheat production to 2.067 billion bushels from its August prediction of 2.114 billion bushels. Other spring wheat projection was put at 479 million, down from 500 million. The USDA pegged quarterly U.S. wheat stocks at 1.717 billion bushels as of Sept. 1, down 2% from a year ago.

CBOT Dec wheat set a new high of $9.61 3/4 per bushel before closing up 6 cents at $9.39. KCBT Dec wheat hit a fresh high of $9.49 1/2 and closed up 9 3/4 cents at $9.291/4. MGE Dec wheat climbed to a new high of $9.14 1/4 before closing up 21 1/2 cents at $9.05 3/4.

With drought being a major problem in wheat production regions worldwide wheat stocks have fallen to dangerously low levels. Should long term climate change be coming into play a shortage of wheat and other agricultural crops could develop that will take prices to far higher levels over the next few years.

With wheat being such a widely used staple commodity a wheat shortage will result in almost immediate highly visible higher prices at the grocery store. With nearly all commodities in up trends look for an alarming dose of food inflation for 2008 and perhaps well beyond.

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