Wheat futures at the Chicago Board of Trade (CBOT) gained 42 percent in July, were up 55 percent from the the lows in June and exceeded a 38 percent gain in 1964, according to records going back to 1959 from the Commodity Trend Service, a private charting firm.
The spot wheat contract was up 34 cents at $6.61-1/2 per bushel at the close of trading on Friday.
Investor funds bought an estimated 16,000 CBOT wheat futures contracts, 80 million bushels or 3.6 percent of this year’s estimated U.S. wheat production of 2.216 billion bushels.
CBOT soybeans jumped to a 6-1/2 month high and corn to a near two-week peak, following the surging wheat market. September corn was up 13-1/2 cents at $3.92-3/4 and August soy was up 25-3/4 cents at $10.52-1/2.
Funds bought 18,000 corn futures contracts and 6,000 soy.
November new-crop soy rose above $10 per bushel for the first time since Jan. 11.
“The market has upside momentum now and no one wants to stand in front of it. I think the wheat market is overstated and way ahead of itself but the market will keep going up until fund buying subsides or until some numbers come out of Russia that would stall the buying,” said Shawn McCambridge, analyst for Prudential Bache Commodities.
Markets were responding to the worst drought in Russia in decades and brought back memories to veteran grain traders of a huge U.S. export program to that part of the world nearly 40 years ago.
A crop disaster in the former Soviet Union in 1972 triggered a massive wheat buying program from the United States by Soviet government grain buyers, boosting CBOT wheat futures sharply higher through the following year.
“They swooped in and bought and no one, except the grain companies selling, knew what was going on…everyone was caught flat-footed,” McCambridge said.
“That is what prompted the USDA to start their weekly export reporting program and also is when USDA started requiring that all export sales of 100,000 tonnes or more be reported within 24 hours,” he said.
This year, the worst drought in decades in Russia’s lush Black Sea region has led analysts to cut sharply crop estimates for that major wheat exporting region. The International Grains Council on Thursday cut its forecast for Russia’s wheat crop by 7 million tonnes to 50 million and Kazakhstan by 3 million to 13.5 million.
Wheat traders are also focused on dry weather in western Australia, that posed a threat to crop output and on Friday the Canadian Wheat Board lowered its 2010 wheat crop forecast for Western Canada by 2 percent, slightly deepending concerns about global production. Prices at 2:13 p.m. CDT (1913 GMT)