Worldwide Weather Worries Make Wheat Burst
The global wheat crop is encountering problems of Biblical proportions, driving wheat prices to 13-month highs on Thursday morning.
Russia and its neighbors, Ukraine and Kazakhstan, who provide nearly 30% of the wheat to the global market, but are currently experiencing the worst drought in 130 years. Hot temperatures and severe drought are causing production estimates across the Former Soviet Union and Western Europe to be slashed, threatening to reduce wheat exports drastically.
At the same time, Canada (11 % of global wheat exports) is suffering from too much rain, which is delaying this year's production. Even the Australians (12%) haven't been able to meet production estimates, as their crop is being threatened by locusts and a dry winter.
As a result of these bullish calamities around the world, wheat prices jumped $1.67 per bushel (+38%) over the last six weeks, reaching a high of $6.10 per bushel in Chicago on Thursday morning. The recent price appreciation is a welcome sign for American farmers, as our domestic harvest is encountering few problems, allowing U.S. producers to sell their large crop at an elevated price on the global market.
Crude Oil Jittery Before Storm
Crude oil prices moved erratically this week as the market watched Tropical Storm Bonnie develop in the Atlantic. As Bonnie built up steam, crude oil prices built in "storm premium," rising $3 during the week to $79.60 per barrel on Friday. The storm is projected to pass through the producing region off the coast of Louisiana this weekend, which could make for an volatile start to trading on Monday.
Sugar Shoots Up
Sugar has continued its upward trajectory, surging to a new four-month high at 18.66 cents per pound on Friday morning. Sugar prices rose 1.55 cents this week (+9%) on continued strong demand from Asia and transportation problems in Brazil, the world's largest sugar producer and exporter. Prices have risen steadily since making a low at 13 cents in early May, allowing "sugar bulls" to accumulate large profits over the last ten weeks.
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