Wheat rises on Russian trade ban

Moscow/Maputo/Chicago: Wheat rose to the highest level in three weeks last week on signs of increased demand for US supplies as world inventories are forecast to fall for the first time in three years.

Wheat has soared 74 per cent from a three-year low on June 9 as adverse weather hurt crops in Russia, Kazakhstan, the European Union and Canada.

Russia will extend a grain-export ban until after the next harvest, Prime Minister Vladimir Putin said on Friday. The prospect of higher food prices have sparked riots in Mozambique.

"We continue to see good, strong export demand for US wheat," said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities in Chicago.

"Rising prices has increased world concern about acquiring supplies."

Wheat futures for December delivery rose 27.5 cents, or 3.9 per cent, to close at $7.4125 a bushel at 1.15pm on the Chicago Board of Trade. Earlier, the price reached $7.42, the highest level for a most-active contract since Aug. 13. The grain jumped to $8.68 on August 6, the highest level since August 2008.

Wheat, which surged 6.7 per cent this week, was supported by reports of US export sales. Shippers sold 110,000 metric tonnes of the grain to Egypt and 275,000 tonnes to unknown destinations, the Department of Agriculture said.

Food riots

Rallies in wheat, corn, rice and livestock have increased concerns that a jump in food costs will spur unrest similar to 2008, when there were riots in countries including Haiti and Egypt.

In Mozambique, police said more than 50 people were arrested in the central city of Chimoio after demonstrators blocked roads to protest increases in food costs. At least seven people have been killed in clashes with police in Maputo, the capital of the southern African nation, Cabinet spokesman Alberto Nkutumula said on Friday.

Global world inventories will fall to 174.8 million metric tonnes in the year ending May 31 from 194 million tonnes a year earlier, the USDA forecast last month. Stockpiles fell to 124.9 million tonnes in 2008, the lowest since 1982. Wheat futures in Chicago reached a record $13.495 a bushel on February 27, 2008.

Wheat is the fourth-biggest US crop, valued at $10.6 billion (Dh38.9 billion) in 2009, behind corn, soybeans and hay, government data show.