Wheat Increases as Dry Weather in U.S. Erodes Crop Prospects

By Sungwoo Park

March 10 (Bloomberg) -- Wheat rose as crops deteriorated in Kansas and Oklahoma, the largest U.S. producers of winter varieties, because of drought in the southern Great Plains.

Texas, Oklahoma and Kansas were mostly dry in the past week, according to National Weather Service data. About 45 percent of Kansas wheat was in good or excellent condition in the week ended March 8, compared with 50 percent a week earlier, the U.S. Department of Agriculture said in a report. In Oklahoma, 21 percent of the crop gained the top ratings, down from 23 percent.

“Dryness through the hard red winter production areas in Oklahoma and Texas” was helping drive up prices, Campbell Roydhouse, a senior trader at Louis Dreyfus Commodities Asia Pte, said from Singapore. “It doesn’t look like those areas will get much rain in the next two weeks and it has been quite warm.”

Wheat for May delivery gained as much as 4 cents, or 0.8 percent, to $5.2725 a bushel on the Chicago Board of Trade and traded at $5.2575 a bushel at 11 a.m. Seoul time. The price fell 0.7 percent yesterday.

Futures rose 1.1 percent last week on concern production will drop, halting a five-week slide. Still, the price is down 61 percent from a record $13.495 in February last year.

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, according to government data.

Soybeans for May delivery climbed 1 percent at $8.74 a bushel at 11:13 a.m. Seoul time, while corn was little changed at $3.6575 a bushel.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.