Feb. 8 (Bloomberg) -- Wheat futures rose the most in a week on mounting concern that the most-severe drought since the 1930s will erode prospects for the winter crop in the U.S., the world’s biggest grain exporter.
Little or no rain fell in the past 30 days in parts of Kansas, the biggest U.S. winter-wheat grower, National Weather Service data show. Parts of the southern Great Plains are in an “exceptional drought,” facing widespread crop and pasture losses and water shortages, according to the U.S. Drought Monitor.
“The western Wheat Belt area is dry, and we’re expecting a shorter crop with this lack of adequate moisture,” Jamey Kohake, the branch manager at Paragon Investments in Silver Lake, Kansas, said in a telephone interview.
Wheat futures for March delivery rose 1.2 percent to $7.6525 a bushel at 10:50 a.m. on the Chicago Board of Trade. A close at that price would mark the biggest gain for a most- active contract since Jan. 30.
World inventories as of June 1 may be 177.01 million metric tons, up from the U.S. Department of Agriculture’s January estimate of 176.64 million, according to the average estimate of 17 analysts surveyed by Bloomberg News. The agency in Washington will update its forecast at noon.
Wheat futures may ease to $7.50 if the report indicates higher stockpiles, Kohake said.
As of yesterday’s settlement, Kansas City Board of Trade futures were 45 cents a bushel above the Chicago price. The premium has tumbled 23 percent since Jan. 31.
High-protein hard red winter wheat used mostly in bread trades in Kansas City, and the CBOT offers the Midwest soft red winter variety used in cakes and cookies.
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.
--Editors: Patrick McKiernan, Millie Munshi