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Wheat rises on fresh concerns about global supply
Wheat prices rose yesterday as dry weather in China and the United States renewed concerns about global supplies and rising food prices. Wheat rose 18.25 cents to settle at US$8.565 a bushel. Stockpiles have been affected by weather problems for months, leading to speculation that global supplies are tightening. Now, China’s key wheat-growing province of Shandong is facing its worst drought in at least 40 years as a result of unusually dry weather across northern and eastern China.
It’s not yet clear what the effect of the drought will be on China's grain supplies or whether the government will increase imports. US farmers are worried about their winter wheat crop because of a dry winter in parts of the Great Plains. “They continue to worry about temperature extremes, one of the worst things for wheat in the wintertime, especially on dry soils,” said Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC. In addition, uncertainty lingers about Australia’s wheat crop after devastating floods there.
The latest weather woes come after last summer's drought severely damaged wheat crops in the Black Sea region, prompting Russia to impose an export ban. The United Nations has urged governments to avoid imposing export restrictions or other short-term measures to cope with rising food prices. It said such steps can make matters worse by driving global prices up.
The impact of higher commodity prices already has forced consumers in many parts of the world to pay more for products that use wheat. Higher food prices have been a factor behind violent protests in Tunisia and Egypt. Most other commodities also settled higher. In contracts for March delivery, corn gained 13.75 cents to US$6.5775 a bushel and soybeans rose 11 cents to US$13.855 a bushel.
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