The global Wheat prices shot up yesterday, hitting their three-week highs as the sentiments continued to firm up on weather worries in Russia, Kazakhstan and Canada.The prices had shot up in Europe on Monday even as the US markets remained shut on the extended weekend following the Independence Day with heightened drought fears in European nations taking prices to fresh one-year highs in London and Paris. The commodity has gained 11.1 percent in last four sessions.
The Russian farm ministry has cut its grain harvest estimate to 85 million tonnes from 88m-90m tonnes in the last year following droughts in areas like Volga, Urals and Central federal districts. While it's the lack of rain in Europe that has been made the bulls call the shots, on the other side of Atlantic, namely in Canada, Wheat harvesting has been delayed because of the wet weather.
A drop in production from foreign countries would send buyers into the U.S. market, helping to boost exports for domestic farmers. The potential for increased demand from U.S. producers helped push prices higher. Wheat for September delivery rose 4.5 cents to settle at $5.075 a bushel, after hitting an intraday high of $5.26 per bushel. It was the fourth straight day wheat prices have risen.
However, the world still has ample supplies, with stocks estimated at some 200 million tonnes. It will be interesting to see if prices manage to take off an all important resistance around $5.30, which pulled the prices lower in the first week of May earlier this year.