Wheat climbs on dwindling Russian supply

SINGAPORE: Wheat advanced for a sixth day on Thursday to the highest price in more than three weeks as Russia may have to slow shipments of the grain as exportable supply declines. Corn and soyabeans gained.

Wheat stockpiles held by farmers in Russia's main exporting regions in the south have dropped below last year's levels, declining as much as 50% in some areas, SovEcon, a Moscow-based agricultural researcher, said on Wednesday. The country banned exports in August 2010 after its worst drought in half a century. The ban was lifted in July.

"Russia could potentially put some export curbs in place, but nothing is for certain," said Sudakshina Unnikrishnan, an analyst at Barclays Capital in London. "For grains we have quite a bit of fundamental support."

Wheat for March delivery climbed 1.8% to $6.525 a bushel at 11:07 am London time on the Chicago Board of Trade. The price rose to $6.53 earlier Thursday, the highest since January 4. A close higher would mark the longest winning streak since prices gained for eight straight sessions ending on December 28. Milling wheat for March delivery advanced 0.6% to 209.25 euros ($275.44) a tonne on NYSE Liffe in Paris.

Inventories with farmers in the Krasnodar region, home to Russia's main export hub at Novorossiysk, have halved, SovEcon said. In the Southern Federal District, farmers held 40% less grain than in 2011, while inventories held by producers in the Rostov region fell 42%, it said.

Russia's three major grain-exporting provinces have shipped most of their supplies and that will lead to a "dramatic" slowdown in shipments from now through June, the US Department of Agriculture's Foreign Agricultural Service said on January 19. US wheat inspected for export gained 27% in the week ended January 19 from a week earlier, USDA said on January 23.

Corn advanced for a sixth straight day, the longest winning streak in four weeks, as crop losses from a drought in Mexico deepened, potentially boosting demand for US supplies. The country is the world's second-largest importer after Japan and the second-biggest buyer of US corn. Acreage damage almost doubled after the worst drought on record. Losses covered 1.15 million hectares as of December 31 for the season ending in March, compared with 630,170 hectares a year earlier, according to data from the nation's Agriculture Ministry posted on Wednesday.