Wheat jumps on concerns about Russian fall planting season; economic news hurts metals, energy

Thursday, August 19, 2010

Wheat jumps on fears about Russia’s fall crop

Wheat prices jumped Thursday as Russia’s persistent, devastating drought raised questions about whether another crop can be planted this fall.

Hot, dry weather severely damaged the region’s spring wheat, prompting Russia to ban exports for the rest of the year. Without significant rainfall, fall planting could be in danger in the region near the Black Sea.

“We’re hearing from guys there they won’t even try to plant the winter wheat unless they get an inch of rain,” said Northstar Commodity analyst Jason Ward said. “A half inch of rain isn’t a drought breaker. They’re going to need an inch plus before they going to try it.”

Traders are expected to keep a close eye on a weekend forecast that is calling for rain in the area, which also includes parts of Ukraine and Kazakhstan.

Wheat for December delivery rose 25.5 cents, or 3.8 percent, to settle at $7.1425 a bushel after hitting $7.24 a bushel earlier in the day. The September contract hit $7.8575 a bushel this month, the highest price since August 2008.

Corn and soybeans both settled lower. December corn lost 4 cents to settle at $4.2925 a bushel and November soybeans fell 18.5 cents to $10.1225 a bushel.

Most metals prices fell on disheartening news about the U.S. economy.

The Labor Department said initial claims for unemployment benefits rose by 12,000 to 500,000 last week, the third straight week of increases.

In addition, the Federal Reserve of Philadelphia said its manufacturing survey was negative 7.7 for August after a reading of positive 5.1 last month. A reading above zero indicates growth in the sector.

Both reports could indicate diminishing demand for metals such as platinum, palladium and copper, which are used in construction and manufacturing.

“Ultimately, the negative sentiment arising from these figures fed markets a grim outlook on the state of the U.S. recovery,” RBC Global Futures said in a research note.

Silver for September delivery fell 7.3 cents to settle at $18.379 an ounce; December copper lost 3.1 cents to settle at $3.3395 a pound; September palladium fell $4.75 to settle at $485.65 an ounce and October platinum lost $9 to $1,527.50 an ounce.

Gold for December delivery added $4 to settle at $1,235.40 an ounce.

The disappointing economic news also pressured energy prices.

Benchmark crude for October delivery fell $1.01 to settle at $74.77 a barrel on the New York Mercantile Exchange.

In other Nymex contracts for October, heating oil fell 2.42 cents to settle at $2.0007 a gallon; gasoline lost 3.25 cents to $1.9287 a gallon and natural gas dropped 6.8 cents to $4.171 per 1,000 cubic feet.

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