Wheat sustains near record-high prices

December wheat on the Chicago Board of Trade remained near record highs as it added 3 cents to $7.42 per bushel on Friday as demand remained high.

Futures were up 7.8 percent on the week, the biggest weekly gain since the week ending June 15, including Thursday’s record high of $7.54 per bushel.

Kansas City Board of Trade December wheat was also higher, adding 9.5 cents to $6.98 per bushel, a gain of 51 percent in the past year.

The high prices for the grain have analysts worried that prices for a wide spectrum of good will rise as prices are expected to stay high as crops have been hurt by bad weather in several regions of the world.

Canada has warned that its output could be as much as 20 percent lower than last year’s crop, while crops in Australia and some wheat-growing regions of Europe and the United States have also suffered droughts and warmer than usual temperatures.

China’s crops could also be smaller, due to both droughts and floods.

The International Grains Council has cut its crop estimate to 607 million tonnes, while predicting that demand will rise to 614 million tonnes at a time when inventories are already at their lowest level in nearly thirty years.

Some nations have already made new purchases in what some analysts have characterized as “panic” buying, and others are positioning to follow suit.

Bread prices are expected to rise - wheat used to make bread is already double what it was last year in the UK.

In addition, however, higher wheat prices could also mean higher prices for meat, poultry, and dairy products where cattle and poultry are fed more expensive wheat and farmers and processors pass their higher costs on to consumers of the beef, poultry, milk and eggs they produce.

Farmers will find little relief by switching to other feed grains as their prices are being supported by their wider use in biofuels manufacture.

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