Russia Wheat-Export Surge Fails to Curb Rally

12.09.2011 09:03 "Agro Perspectiva" (Kyiv) — This year’s surge in Russian wheat exports, big enough to feed Japan for more than two years, may fail to stop a rally as supply is curbed by droughts from the U.S. to Australia. Russian sales will gain more than fourfold to 17.9 million metric tons this year, second only to the U.S., the median of 16 analysts’ forecasts compiled by Bloomberg showed. A fourth straight year of record consumption means global stockpiles will shrink to 28.7 percent of demand, the smallest ratio since 2009, U. S. Department of Agriculture data show. Prices will rise 16 percent to $8.50 a bushel by the end of December, according to 20 analysts surveyed by Bloomberg. Russia resumed exports in July after an almost yearlong ban prompted by its worst drought in a half century. Dry conditions are hurting crops from Texas to Iowa, just as near-record corn prices spur livestock farmers to use the most wheat for feed in two decades. Grupo Bimbo SAB, the world’s largest bread maker, and CSM NV, the biggest manufacturer of bakery ingredients, increased prices as grain costs rose. «Wheat is definitely a bullish market,» Romain Lathiere, a fund manager at Diapason Commodities Management in Lausanne, Switzerland, which has about $9 billion invested in raw materials, said by telephone on Sept. 5. «We don’t have good news concerning the crop, and there is no solution that will last until farmers seed the next crop during this winter. And demand, particularly for feed, is increasing.» Wheat rose 18 percent on the Chicago Board of Trade since Russia resumed exports July 1, as drought spread across the Great Plains in the U.S. and Europe began harvesting crops after the driest spring in three decades. The Standard & Poor’s GSCI Agriculture index of eight commodities rose 11 percent while the MSCI All-Country World Index of equities slumped 17 percent. Treasuries returned 6.3 percent, a Bank of America Corp. index shows. Global wheat demand will advance 3.4 percent to 676.9 million tons in the 2011–2012 season, according to the USDA, which uses a combination of local marketing years for its estimates. The department increased its forecast in a report today. Stockpiles will total 194.6 million tons, up 0.7 percent from a year earlier after plunging 3.3 percent a year earlier, the department said.

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