Wheat keeps making new highs

Wheat Price Rises to Record $9 a Bushel on Global Crop Concerns

By Madelene Pearson and Danielle Rossingh
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Sept. 12 (Bloomberg) -- Wheat surpassed $9 a bushel for the first time as a drought in Australia and Canada cut production, pushing global stockpiles toward a 26-year low.

The U.S. Department of Agriculture today cut its estimate of Australia's wheat crop to 21 million metric tons from last month's estimate of 23 million tons. Some analysts expected the USDA forecast to show Australian production would be as low as 15 million tons. Canada will produce 20.3 million tons, a 5.6 percent drop from August's estimate, the USDA said.

Increasing demand from Egypt to India and weather damage to global crops have driven up prices in Chicago by 79 percent this year. Users including Kellogg Co., the biggest U.S. cereal maker, General Mills Inc, Sara Lee Corp. and PT Indofood Sukses Makmur, the world's biggest producer of instant noodles, are responding by raising prices, fueling inflation.

``The market is in a real frenzy,'' said Tobin Gorey, a commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. ``It's feeding through to the consumer.''

Wheat for December delivery rose 8.75 cents, or 1 percent, to $8.9925 a bushel at 10:40 a.m. on the Chicago Board of Trade, after earlier reaching $9.1125 in overnight trading. The most- active contract has more than doubled in the past year.

Egypt, Jordan, Japan and Iraq plan to buy 460,000 tons of wheat. India is seeking to import 5 million tons this year to replenish its inventories. The grain, used in livestock feed, noodles, cakes and bread, trades in 60-pound (27.2-kilogram) bushels, each with enough grain to make 73 loaves, according to the Web site of Lake Oswego, Oregon-based bread.com.